After the bell yesterday, SanDisk (NASDAQ:SNDK) reported third-quarter earnings that came up short, and now shares of the leading flash-memory maker are getting absolutely smashed, down nearly 24% to $21 and change.

Preying on many investors' fears, the culprit for the bad news was a sharp decline in average selling prices (ASPs). According to SanDisk CEO Eli Harari, industry-wide supply of NAND flash memory outgrew demand "during the summer months," sending ASPs per megabyte down 22%. So while revenue grew 45% over last year's quarter to $408 million, that figure represented a 6% decline from the second quarter. As a result, product margins were also down six percentage points sequentially, and SanDisk's third-quarter earnings of $54.1 million -- or $0.29 per share -- came up five cents short of the analyst estimate.

After that bit of news, the stock fell 19% in after-hours trading after closing the regular day at $28.20. Just last week, the stock had been trading at over $31.

Fellow Fool Seth Jayson -- a SanDisk shareholder -- expressed a number of concerns. The first is that the company missed so badly, yet there was no forewarning from management whatsoever -- a strike against management credibility. What's more, as a poster on the Fab15 discussion board on the Fool website pointed out (subscription required), SanDisk's largest shareholder -- Citigroup (NYSE:C) -- somewhat suspiciously knew enough to downgrade the stock to a "Sell" just the day before the earnings announcement.

Meanwhile, SanDisk's CEO continues to sell $1 million in shares on a monthly basis, with no insider buying in sight. For reference, according to Yahoo! (NASDAQ:YHOO) Finance, insiders own a paltry 3.67% of SanDisk's outstanding shares.

While there are a good number of intelligent people who like SanDisk, there's not much that looks good here. Some might point out that the $54.1 million or $0.29 per share in third-quarter earnings more than "tripled" last year's $14.8 million or $0.09 per share profit. However, last year's result included a $36 million charge due to the "unauthorized sales of UMC shares" (which by itself sounds awful enough); excluding the charge, SanDisk's profit only climbed 6.5% on a 45% increase in revenue.

Looking ahead, the company expects to break the $500 million quarterly revenue mark for the first time in the seasonally strong fourth quarter. Analysts currently expect SanDisk to earn $0.41 per share on $530 million in revenues.

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Fool contributor Jeff Hwang owns none of the companies mentioned above.