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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