SanDisk slips on missed forecasts

SanDisk, a manufacturer of flash-memory chips, traded lower after the company said missteps weighed on first-quarter results and prompted the company to issue a disappointing full-year sales outlook.

The Milpitas, California-based company reported a profit of $39m or 17 cents a share, compared with $269m, or $1.14 a share, in the same period a year ago. Sales declined 12 per cent to $1.3bn.

Analysts on Wall Street had forecast earnings of 37 cents a share, on sales of $1.3bn. Excluding one-time acquisition and restructuring charges, SanDisk reported earnings of 62 cents a share, below Wall Street forecasts.

"Our financial performance over the past two quarters has been unacceptable to us as a management team," Sanjay Mehrotra, chief executive, said.

SanDisk said it was hamstrung by product assembly issues, softer than expected pricing, supply constraints and a market shift to lower cost drives.

"While the issues appear to be unrelated, the common theme seems to be a poorly constructed product portfolio and the inability to quickly shift to meet changing customer demands," Deepon Nag, an analyst at Macquarie, said.

Mr Nag said this was due to the company's vertically integrated model but added that SanDisk "has significant technological and strategic value, making it an attractive acquisition target".

The company also issued second-quarter guidance that fell short of analysts' expectations. SanDisk expected sales in the range of $1.15bn-$1.23bn, while Wall Street had forecast revenue of $1.4bn. Full-year revenue guidance of $5.4bn-$5.7bn missed forecasts for $6.1bn.

In light of lower guidance, the company said it would cut 5 per cent of its non-factory headcount, amid other cost-cutting measures.

Shares of SanDisk, which have declined 31 per cent this year, fell more than 5 per cent to $67.20 and were among the biggest fallers on the S&P 500.

WW Grainger, the industrial supplies provider, announced a $3bn share buyback programme of its common stock over the next three years. The news lifted shares of the company 1 per cent to $244.36.

The Chicago-based company also reported first-quarter results that fell short of Wall Street expectations and lowered its full-year sales growth expectations. "This was a challenging quarter. Our results were affected by continued headwinds from the strong US dollar and weakness in the oil and gas sector in North America," chief executive Jim Ryan said.

Shares of Panera Bread climbed 11 per cent to $182.74, after the fast-casual chain increased its share buyback programme to $750m and announced plans to sell and refranchise 73 of its cafes.

Etsy shares nearly doubled in their trading debut on Thursday. Shares of the Brooklyn-based crafts retailer opened at $31, after pricing at $16 apiece on Wednesday. Meanwhile, shares of Party City, a party supply retailer climbed nearly 21 per cent to $20.50 in its debut, having priced at $17 apiece.

Energy and utility stocks weighed on the S&P 500, as US stocks traded modestly lower.

The S&P 500 declined 0.1 per cent to 2,104.79, the Dow Jones Industrial Average was little changed at 18,104.00, and the Nasdaq Composite was flat at 5,008.06.

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