NEW YORK, NY -- (Marketwire) -- 01/29/13 -- The substantial rise in the amount of data needed to be managed has created huge demand for products and services offered by companies such as SanDisk Corp. and EMC Corporation. According to estimates from Japanese company Toshiba, the volume of data generated globally has been increasing by over 40% annually. Cisco estimates that the worldwide cloud traffic will grow at an annual rate of 45%. While hard disk drives (HDDs) are still the dominant storage devices, lately there has been a shift to solid-state drives (SSDs), which are faster than conventional hard drives. Still HDDs remain dominant due to the fact that SSDs are much more expensive per GB.
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Although SSDs are much more expensive than HDDs, there has been an increase in demand due to the shift to tablet computers. Tablet computers use solid state memory chips and with tablet sales expected to continue to rise, SSDs should see robust demand going forward.
Last week, SanDisk said that fast growing SSD business accounted for 10% of its fourth quarter revenue. In fact, SanDisk's CFO Judy Bruner believes that SSDs would be the company's biggest growth driver in 2013. The growth will be driven by increasing popularity of tablet computers.
Sanjay Mehrotra, President and CEO of SanDisk, at the time of release of fourth quarter results last week said that the company ended 2012 with strong momentum in its SSD business. Mehrotra said that the company is now supplying client SSDs to ten leading PC OEMs and its enterprise SSDs are qualified at a fourth storage OEM.
SanDisk's fourth quarter results, which were released last week, beat Street estimates. For the quarter, the company reported revenue of $1.54 billion, down 2% over the same period in the previous year. On a sequential basis, the company's revenue improved 21%. On a non-GAAP basis, the company's earnings for the quarter were $1.05 per share. SanDisk's revenue and non-GAAP earnings for the quarter easily beat Street estimates.
Although SanDisk's revenue and earnings for the fourth quarter beat estimates, investors were disappointed as the company gave a modest revenue outlook. SanDisk has been negatively impacted by a decline in prices of NAND flash chips, which are used in smartphones, cameras, storage devices and tablets. While CEO Mehrotra expects improved NAND pricing in 2013, the company has given cautious revenue outlook for the first quarter.
EMC Corp. will report its fourth quarter financial results on today (at the time the article was completed the release was not yet released). The company's performance in the second half of 2012 has been disappointing, mainly due to the uncertain economic environment. Following the release of third quarter results in October last year, CEO Joe Tucci had said that economic and political uncertainty are affecting business confidence and this is having a negative impact on information technology (IT) spending rates. Still, EMC is well-positioned for growth, given the company's focus on areas like storage, security and virtualization.
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