SanDisk (Nasdaq: SNDK) posted healthy revenue of $1.6 billion for the fourth quarter of 2011. However, the company forecast $1.3 to $1.35 billion in revenue for the first quarter, below the $1.46 billion expected by analysts. This resulted in the stock price tanking by 10%.

I still think the market has overreacted to the guidance and the stock makes for a good buying opportunity. Let me tell you why.

Solid business model
SanDisk's efficient business model is reflected in the steady revenue growth it has been able to sustain over the last eight quarters. In addition, the company has been able to deliver more than 25% in operating margins over the past ten quarters.

SanDisk has diversified its operations by acquiring a number of clients and entering the highly profitable enterprise SSD market through its acquisition of Pliant Technology. Given the growing demand from enterprise customers for faster and efficient SSDs used in data centers for cloud computing, the company should do well.

Bright industry prospects
Besides the sheer demand for smartphones and tablets, the rollout of high-speed wireless networks such as 3G and 4G LTE would enable users to download more content at a faster rate which, in turn, would lead to further demand for storage space. There are also other product categories, such as ultrabooks, smart TVs, and digital cameras that would potentially drive growth for flash-based storage. SanDisk, with its strong product portfolio and technological leadership in NAND controllers, should benefit from the demand momentum in the long run.

The bumps in the road
For the near term, though, given the weak economic conditions, the company is cautiously lowering its mast. While manufacturers such as Samsung and Apple witnessed phenomenal growth in demand, there were others who struggled. SanDisk saw thirteen of its OEM clients lower their production forecast in expectation of fewer sales of their smartphone products, effectively hitting demand for the company's NAND memory chips.

In line with this trend, the price of NAND chips has also been declining continuously. This was reflected in the 34% decline in SanDisk's average selling price per gigabyte for the year 2011 on a year-on-year basis.

The Foolish takeaway
Sandisk is delaying the rollout of its new Fab 5 production facility until July. I like the move. The diversity of SanDisk's customer base and the growing demand for tablets and smartphones should put the company back on the growth track soon.

So don't forget to stay up to speed with SanDisk's progress by adding it to your watchlist. It's free and lets you stay on top of the latest news and analysis for your favorite companies.

Fool contributor Keki Fatakia does not hold shares in any of the companies mentioned in this article. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.