Recession Hits SanDisk: Toshiba Rescues
SanDisk (NASDAQ:SNDK) will be selling 30 percent of it’s manufacturing capacity back to Toshiba the Japanese electronics company. The deal should be finalised by the first quarter of 2009. The move will reduce the production on the SanDisk’s NAND flash memory.
NAND flash memory chips are used to give power to portable music players and products like that, due to the credit crunch and reduction in consumer spending the demand for the NAND flash memory has gone down considerably.
This deal with Toshiba will see SanDisk reduce equipment lease obligations and receive cash by roughly $1 billion. However, Toshiba and SanDisk will remain equal partners for the approximate 70 percent capacity of the factories that remain in the joint ventures.
As the stock market opened on Monday SanDisk (NASDAQ:SNDK) tumbled $1.21 or 8.1 to $14.30.