SanDisk CEO says board still open to transaction with Samsung at 'right price'

By Jennifer Lanning Drey

Portland, Ore., Oct. 20 - SanDisk Corp.'s board of directors remains open minded regarding a potential transaction with Samsung Electronics Co., Eli Harari, chief executive officer of SanDisk, said Monday during the company's third-quarter earnings conference call.

"Our board is focused on the right price and the right protections for our shareholders, including a renew of the Samsung patent cross-license in case a transaction does not close," Harari said.

The CEO said SanDisk has publicly communicated its position to Samsung but has not had further discussions since SanDisk turned down Samsung's $26-per-share offer in September.

In the meantime, SanDisk reported it has entered into a non-binding memorandum of understanding with Toshiba Corp. to sell approximately 30% of the current manufacturing capacity of the parties' joint ventures to Toshiba for $1 billion in cash and reduced equipment lease obligations.

Harari said the move will significantly reduce SanDisk's capital spending and strengthen its balance sheet.

That transaction is expected to be completed in the first quarter of 2009.

"We're building our business for the future and adapting quickly to the near-term realities in our market by taking strong proactive steps to sharpen our focus and strengthen our balance sheet," Harari said.

The company was negatively affected during the third quarter by slowing demand that resulted from the global economic crisis, which led to excess supply and severe pricing pressures, he said.

SanDisk reported third-quarter revenue of $821 million, down 21% from the same quarter in the prior year.

The company had cash and cash equivalents of $721.1 million at Sept. 28, down from $833.7 million at Dec. 30, 2007.

SanDisk develops, manufactures and markets NAND-based flash storage card products that are used in consumer electronics products. The company is located in Milpitas, Calif.

Seoul, South Korea-based Samsung and Tokyo-based Toshiba are electronics companies.

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