Thursday, February 22, 2007

Memory card may drop in price

Your next flash memory card or USB stick may carry a whole different price tag than a comparable product one or two months ago. Sandisk today said that NAND component pricing has declined buy about 50% in the past two months alone, mainly due to excess supply as well as weak Q1 demand. As a result, the company saw its retail and OEM pricing fall much faster than anticipated. As a result, Sandisk will cut prices in order to be able to keep its current market shares.

The firm announced that many products will see cuts in the range of 30-40% below Q4 levels. Sandisk believes that there will be a strong pickup for flash memory in demand in the second half of the year, but the company has virtually no visibility when there will be a relief in competitive pressure.

Job and pay cuts will finance the lower product prices. The company said that it will lay off about 250 employees and put a freeze on hiring. There will also be a freeze on all salaries, while VPs will see their salaries decrease by 10%; the president and all EVPs will see a 15% cut and CEO Eli Harari gets his base salary reduced by 20%. Sandisk expects the workforce reduction and pay cuts to result in savings of about $30 to $35 million.

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