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News Center What's New
NAND Flash Stocks Slip
 
  Shares of companies that make memory chips used in iPods and other electronic devices slid Tuesday after Intel Corp. warned that declining prices would pull down its first-quarter profit margins.

On Monday, Intel warned that falling prices for NAND flash hurt profits more than expected. It reduced gross profit margins to 54 percent of revenue from a previous 56 percent.

Memory prices slumped last year because of global overproduction and NAND prices remain unsteady this year.

Credit Suisse analyst John W. Pitzer in a note to investors called the announcement a setback, but forecast that NAND margins will recover in the second half of 2008.

Intel shares shed 35 cents to $19.66 in midday trading.

The announcement also spelled bad news for Intel's NAND flash joint venture partner, Micron Technology Inc. The companies set up a joint venture called IM Flash Technologies in late 2005 to make NAND flash chips. Apple, which requires NAND chips for iPods and other devices, is one of its largest customers.

Micron shares tumbled 35 cents, or 4.9 percent, to $6.82 in midday trading. The stock has traded between $5.47 and $14.20 over the last year.

Citi Investment Research analyst Craig A. Ellis said in a note to investors that Intel's statement was a fresh reminder about first-quarter risks for major NAND flash memory chip maker SanDisk Corp.

However, he said there is little in the statement that is not already known by SanDisk shareholders, unless it signals that there is about to be a big drop in contract prices.

Ellis reiterated his "Buy" recommendation on SanDisk and said that if contract prices remain firm, a rally in the share price toward his $46 price target is possible.

SanDisk shares fell 54 cents, or 2.3 percent, to $22.51 in midday trading. Earlier, the stock hit a new year low of $22.20, slipping past its prior 52-week low of $22.76.
release time:2008-3-6
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