SanDisk Corporation
NASDAQ: SNDK
Founded: 1988, IPO: 1995
Founder, Chief Executive Officer: Dr. Eli Harari
Co-Founder, Chief Operating Officer: Sanjay Mehrotra

Sunnyvale, CA-based SanDisk Corporation’s latest earnings statement has made investors very happy. The company posted a net profit of $41.3 million, or 52 cents per share, compared with a year-earlier profit of $9 million, or 13 cents per share in the second quarter of fiscal 2003. Revenue grew 84% year-over-year to $234.6 million.

SanDisk manufactures and markets flash memory data storage products for industrial, communications, highly portable computing and consumer electronics. Product revenues were a record $214.0 million, a growth rate of 85% year-over-year and 38% sequentially.

Infact, the record quarter saw analysts scrambling to raise the bar on the company’s expected performance. The company itself announced that the third quarter would see product revenues “slightly higher” than the second quarter. SanDisk was also included in the Fortune list of 40 companies that are expected to be tope performers in 2003.

The company is currently on a roll, leveraging industry wide NAND flash memory capacity shortages and the worldwide success of the camera cell phone. It is, however, subject to intense pricing pressures, which could affect the SanDisk’s overall productivity if the company is unable to ratchet up its flash memory capacity. Sales could also be impacted by economic uncertainty in their overseas markets, particularly in Asia. The company currently sources all its flash memory, controller wafers and flash memory products from FlashVision, Hitachi, Samsung, Toshiba, Tower and UMC.

SanDisk also relies on third-party subcontractors in Taiwan, China and Japan for the assembly and testing of some card and component products. Hence, any adverse economic or political activity in those regions could affect its balancesheets seriously. In cases of short supply of flash memory products, the company is in danger of losing marketshare if it cannot leverage production accordingly. Since reporting strong first-quarter results on April 16, the stock has risen nearly 174%. SanDisk shares were trading at $53.86 at the time of going to print.


Hughes Software Systems
BSE: HUGH.BO
Incorporated: 1991, IPO: 1999
Chairman: Pradman Kaul
President & Managing Director: Arun Kumar
Employee Strength: 1600+

Despite the still challenging nature of the telecom industry, Hughes Software Systems is sitting pretty. The company, which provides software design and services to the likes of Nokia Corp., NEC Corp. and Lucent Technologies Inc., recorded a sharp increase in revenues from $ 10.84 million to $17.02 million for the first quarter of fiscal 2003—04.

Company officials also increased their fiscal 2003-04 guidance from the previously stated 35—40% to 55—60%, indicating that the worst was over in the telecom sector. President and Managing Director Arun Kumar said, “Although, the overall macro picture in the global telecom industry is still hazy, we have seen continued acceleration in our business and have built a strong backlog. Based on this, we are even more optimistic about the future and have revised our financial guidance upwards for the rest of the fiscal year.”

One of the main drivers for growth has been the company’s BPO business, which saw a 139% sequential growth. The company also acquired Tenet Technologies Private Limited, which has businesses in 3G, IP and Mobile Applications. The company expects to gain a foothold in the Japanese market through this acquisition that it expects to complete in 3—4 months.

However, the major gain to come from the company as far as shareholders are concerned is that the company is the growing diversification of its revenue base. Its main client, Hughes Network Systems, accounted for 22% of total revenue in the first quarter, down from 26% in the previous quarter

The company caught investor attention when Rupert Murdoch’s News Corp. acquired 56% stake in its parent, Hughes Electronics. However, with the News Corp. acquisition believed to be aimed at controlling another Hughes Electronics subsidiary DirecTV, which has 11 million U.S. subscribers, it is believed that News Corp. will sell its stake in Hughes Software Systems.