SUNNYVALE, CA, October 18, 2000 -- SanDisk Corporation (NASDAQ:SNDK), the world's largest supplier of flash memory data storage products, today announced record revenue for its quarter ended September 30, 2000. Total third quarter revenues were $170.8 million, an increase of 153% from $67.5 million in the third quarter of 1999 due primarily to increased revenues from CompactFlash and MultiMediaCard products and higher license and royalty revenues. Product revenues were $151.8 million, an increase of 163% from $57.6 million for the same period last year. Revenues from licenses and royalties were $19.0 million, up 92% from $9.9 million in the third quarter of 1999. Net income for the quarter was $25.6 million, up 294% compared to $6.5 million in the same period last year. In the third quarter, diluted earnings per share were $0.35, compared to $0.11 per share in the third quarter of 1999.
Total revenues for the third quarter increased sequentially by 19%. Product revenues increased 24% from $122.6 million for the second quarter of 2000. Revenues from licenses and royalties were 11% lower than the previous quarter due to the timing of recognizing revenues from our various license agreements. Third quarter diluted earnings per share increased to $0.35 per share, compared to $0.33 per share for the second quarter of 2000.
"The third quarter was another excellent quarter for SanDisk with total revenues and operating income again reaching record highs," said Dr. Eli Harari, President and CEO of SanDisk. "New records were achieved in product revenues and number of units and megabytes sold. Total unit sales reached a record 4.7 million, up 57% from 3 million units in the prior quarter and total Flash memory megabytes sold increased sequentially by 41%. We experienced strong sequential growth in unit and megabyte sales for both our CompactFlash and MultiMediaCard product lines. Product gross margins improved to 33%, up from 31% in the previous quarter primarily due to lower manufacturing costs which were partially offset by moderate price declines. Availability of Flash memory from the three fabs at UMC and from our partnership with Toshiba improved significantly in the second half of the quarter.
"Sales growth improved sequentially in North America, Europe and the Far East. OEM sales were robust and we are particularly encouraged by the growing strength in sales through our retail channel.
"In the fourth quarter, we expect favorable market conditions for digital cameras, digital camcorders, smart phones and industrial applications, as well as strong holiday sales of Flash cards to consumers through retail stores. Usage of our products is increasing in a number of rapidly growing consumer and industrial applications, and we are therefore optimistic about continuing growth in our business in Q4 and in 2001."
This news release contains certain forward looking statements including our expectations for future product revenues and bookings, average selling prices, gross margin and profits that are based on current expectations and involve risks and uncertainties that may affect our business, financial condition and results of operations. In addition to the factors discussed above, other risks include: the availability of adequate supply of flash memory wafers from UMC in Taiwan and from other sources; the availability of other critical materials and components; the timely and successful manufacturing ramp up of new product generations and new foundries with acceptable yields and manufacturing costs; increased expenses and fluctuations in operating results related to the startup of wafer production at our FlashVision foundry joint venture; the timely introduction and acceptance of new consumer products that incorporate our flash storage devices; slow growth in the emerging markets for our products including the portable digital music player market; future average selling price erosion due to excess capacity and price competition; the continued successful ramp up of assembly operations in China, Taiwan and the Philippines; seasonality of product sales; success in developing brand name preference and an efficient distribution system for SanDisk's products in the retail channel; economic conditions and exchange rates in Japan, the Pacific Rim and other geographic regions as they affect SanDisk's customers; the successful development and launch of our Secure Digital card products; and the other risks detailed from time to time in our Securities and Exchange Commission filings and reports, including, but not limited to, the Form 10-Q for the quarter ended June 30, 2000 and the Annual Report on Form 10-K for the year ended December 31, 1999. Future results may differ materially from those previously reported. We assume no obligation to update the information in this release.
SanDisk Corporation, the world's largest supplier of flash data storage products, designs, manufactures and markets industry-standard, solid-state data, digital imaging and audio storage products using its patented, high density flash memory and controller technology. SanDisk is based in Sunnyvale, CA.
SanDisk's third quarter 2000 conference call is scheduled for 2:00 p.m. PDT, Wednesday, October 18th. The phone number is (973) 872-3100.
CompactFlash and CF are trademarks of SanDisk Corporation.