Shares of memory-chip marketer LexarMedia
The company expects sales of $155 million to $160 million and red ink totaling $17 million to $19 million. That's a pretty big disappointment when last year's quarter saw net income of $7 million on $81.5 million in sales. A margin squeeze because of falling prices -- a situation instigated by larger competitor SanDisk
SanDisk took some knocks yesterday, too, and though the two often move in tandem, the response shows that investors are having trouble differentiating between the two firms. Unlike Lexar, SanDisk has a potent secondary revenue stream in its licensing of intellectual property (IP), with customers that include Sony
Last quarter, SanDisk's licensing revenue more than doubled over the prior-year period to $48 million. Lexar's IP revenues fell that quarter to $3.6 million. In addition, SanDisk's larger market presence and tight relationship with raw memory providers help insulate it from price drops.
But getting back to Lexar, a quick look at the newswire finds a dozen or so law firms jumping on the hay wagon to Heck, hoping to win class action suits against Lexar for securities fraud. Vultures always circle those who stumble in the desert, I guess.
On the positive side, there's a recently announcedEastman Kodak
The stock may look cheap, but it could always be cheaper. With so much uncertainty, Fools would be wise to wait a couple of weeks and take a look at the situation after the full earnings release.
For more Fool coverage of the digital-film business:
- Check out Tim Beyers' excellent assessment of SanDisk's sleeper assets.
- Ponder what Canon's and Fuji's digital-camera sales may mean for memory.
- See why SanDisk is a stock for the lazy investor.