Archive: former SanDisk headquarters, Milpitas, California, January 2014. LPS.1 / Wikimedia Commons, CC0, cropped.
Sandisk announced an eight-for-one stock split Thursday as the flash-memory company reported $11 billion in fiscal first-quarter revenue and forecast another increase in the current quarter.
The company published the results at 4:05 p.m. Eastern in its October 29 earnings release. Revenue rose 23% from the preceding quarter to $11.031 billion, while GAAP net income reached $8.101 billion, or $52.60 per diluted share.
Sandisk’s split is intended to make its shares more accessible, including to employees participating in its stock-purchase plan. It changes the number of shares outstanding, not the proportion of the company each shareholder owns.
Three dates for the stock split
Shareholders of record at the close of business Monday, November 9, will receive seven additional shares for every share they hold. The new shares are scheduled to be issued after the market closes Thursday, November 19.
Split-adjusted trading is expected to begin at the market open Friday, November 20. Sandisk says its overall market capitalization and stockholders’ ownership percentages will not be affected by the split itself.
The company specified that all per-share information in the earnings release is on a pre-split basis. That applies to both the reported first-quarter earnings and the second-quarter outlook, an important distinction when comparing figures before and after the share count changes.
Profit growth and share repurchases
First-quarter GAAP diluted earnings per share rose 20% from the preceding quarter. On Sandisk’s adjusted, non-GAAP measure, diluted earnings were $49.51 per share, compared with $39.25 in the prior quarter. The two measures use different accounting adjustments and should not be treated as interchangeable.
GAAP gross margin was 85.0%, compared with 84.6% in the preceding quarter. The company reported GAAP operating income of $8.780 billion, up from $7.037 billion. Chairman and Chief Executive David Goeckeler attributed the performance to growing product demand, including growth in the data-center business.
Sandisk also returned $5 billion to stockholders through repurchases of approximately 3.2 million shares during the quarter. Across the past two fiscal quarters, it repurchased six million shares, approximately 4% of total shares outstanding, according to the company.
A repurchase and a stock split have different effects. The company reports buying shares back as a use of cash, while the split distributes additional shares proportionately. The split should not be described as a cash payment to investors.
Higher revenue forecast for the second quarter
Sandisk forecast fiscal second-quarter revenue of $12.2 billion to $12.6 billion and non-GAAP diluted earnings of $55 to $57 per share, on the same pre-split basis. Those figures are management’s outlook, not results already earned.
The company did not provide a corresponding GAAP earnings-per-share forecast. It said some adjustments could not be predicted or quantified with sufficient certainty to supply a full reconciliation without unreasonable effort.
The reported first quarter ended October 2. Sandisk cautioned that the release reflects the information currently available to management and that figures in its subsequent Form 10-Q could differ as closing procedures and review are completed. Future results also depend on demand, pricing, product transitions and other business risks identified in the release.
JBizNews Desk | Milpitas, California
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