SanDisk Widens Presence in SSD - Analyst Blog


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Flash memory storage vendor SanDisk Corp. ( SNDK ) recently acquired FlashSoft Corp., a technology start-up providing flash memory software solutions. The acquisition will allow SanDisk to strengthen its position in the enterprise market for solid state disk drive ( SSD ) storage. Financial details of the transaction were kept confidential.

FlashSoft's caching software products help in speeding up server performance using flash memory. Its product allows users to deploy cache for many virtual machines from a smaller number of flash storage devices.

FlashSoft is now part of SanDisk's Enterprise Storage Solutions business and its products will be sold both as standalone and bundled offerings, in conjunction with SanDisk's existing storage products. The acquisition will be neutral to 2012 results and accretive in 2013.

Apart from this, the company announced that it has entered into a worldwide, exclusive agreement with Diskeeper Corp. to license its caching software for SSDs. Under the terms of the agreement, SanDisk will provide Diskeeper' solutions both as standalone software products and bundled with its SSD products for client computing applications.

At its recent analyst day, SanDisk announced that it expects contribution from the SSD business to grow to roughly 14.0% in 2014. The acquisition of FlashSoft and the licensing agreement with Diskeeper highlights SanDisk's commitment to further penetrate the SSD segment. With the combined solution, OEM customers can manufacture Ultrabooks and other ultra-thin devices that enhance user experience with speedier responsiveness and better performance.

In the recently concluded fourth quarter, SanDisk witnessed strong demand for its flash memory products thanks to the increasing popularity of Apple Inc. 's ( AAPL ) iPad and iPhone as well as Google Inc. 's ( GOOG ) Android smartphone.

We believe that the acquisition will help SanDisk to emerge as a major player in the fastest growing flash memory market, thus lending greater stability to its revenue stream. We also expect a turnaround story in the second half of the year based on growing demand for NAND flash.

But near-term visibility, memory price declines, lackluster PC sales, European issues and currency fluctuations are headwinds.

Currently, SanDisk holds a Zacks #3 Rank, which implies a short-term Hold rating.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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