You can't call SanDisk's (NASDAQ:SNDK) products flimsy. When a balloon sent up by University of California scientists crashed in the Pacific Ocean, the researchers found two SanDisk memory cards intact among the submerged wreckage.

In the second quarter, SanDisk had equally sturdy results for its shareholders, beating Wall Street's expectations. Net earnings for the quarter were $70.5 million, or $0.37 cents per diluted share. That was down slightly from $70.6 million, or $0.38 cents a diluted share, in the year-ago period. The Street expected $0.32 cents per diluted share.

During the quarter, revenues increased 19% to $515 million. The company generated $59 million in cash flow in the second quarter; it now has $1.45 billion in the bank.

The flash memory business is fiercely competitive and requires cutting-edge technology. SanDisk has nearly doubled its research and development spending over the past year, during which time R&D also doubled as a percentage of revenue. In the second quarter, SanDisk spent $61.4 million on research and development. This increase indicates that the company's profit was roughly flat, despite a 20% jump in sales.

SanDisk's average price per megabyte of memory sold declined 62%. The company cited slightly higher selling prices (in response to higher per-unit megabyte capacity on each chip), but this metric bears monitoring. Higher costs and falling prices per unit might equate to margin compression over time.

The company has focused on high-capacity cards, which are experiencing a surge in demand. Cell phones increasingly require high-end memory for their new camera, video, and music capabilities. The gaming industry provides another key demand source.

Such trends are likely to continue. Fortunately, SanDisk's investments have positioned the company very well. The company is adding new capacity for chip manufacturing and plans to launch new chips. It has also invested aggressively in marketing and distribution agreements, most recently with Wal-Mart (NYSE:WMT).

According to the conference call, management indicated that investors should expect "significant returns" for 2006. Shareholders are probably not disappointed with current results, either; the stock price increased 11.27% to $31.40 on the earnings news.

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Fool contributor Tom Taulli does not own shares mentioned in this article.