In last night's earnings report, SanDisk (NASDAQ:SNDK) proved once again that it's the player to beat in the flash memory market. The company reported $0.58 of pro forma earnings per diluted share, 32% above the analyst consensus, on $719 million of gross sales. That's 5% higher sales than expected, and 40% above the year-ago mark. Shares were trading up by about 20% in after-hours action.

While the raw numbers look superb, I really wanted to see a return to improving margins. But trailing-12-month (TTM) gross margins dipped by 0.5 percentage points to 39.5%, and operating and net margins stayed relatively flat at 22.7% and 13.9%, respectively.

Mind you, the numbers I'm talking about are about as good as it gets in the markets where SanDisk makes a living. Apple (NASDAQ:AAPL) is often held up as a hardware margin monster, but SanDisk has it beat on all three levels, by comfortable distances. The same goes for Micron (NASDAQ:MU), Infineon (NYSE:IFX), and Imation (NYSE:IMN). Sony (NYSE:SNE) can't compete on that playing field either, and really, the only credible peer right now seems to be Samsung, at least judging by operating efficiency.

The conference call made no mention of Freescale (NYSE:FSL) and its magnetoresistive random access memory, or MRAM -- the presumptive threat to all things flash-based -- and for good reason: That revolution is many years away, if it ever arrives at all. Freescale is shooting at a moving target, and SanDisk is one of the stalwarts still working to improve the efficiency, speed, and cost-effectiveness of NAND flash memory. This one's clearly not bothering SanDisk's management yet, nor does it rate a blip on the analyst radar.

With a process shrink to 70-nanometer technology under its belt, SanDisk is making its memory chips at ever-lower cost, and the joint fabrication plant deal signed with Toshiba should ensure a healthy future supply even as worldwide memory demand keeps growing like those dollar weeds in the backyard. I'd like to see the company tighten up its margins a bit more, but maybe I'm just being picky. SanDisk is doing great just the way it is.

Further Foolish reading:

  • SanDisk is No. 2 in portable music players. Guess who's No 1.
  • Micron is doing its best SanDisk impression.
  • But SanDisk has Skype on its side.
  • Should SanDisk fear the MRAM?

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Fool contributor Anders Bylund holds no position in the companies discussed here. He also went out of his way not to get a phone that can take pictures or play music -- he'd play with it all the time. Foolish disclosure fits on any size memory card. You can check out Anders' holdings for yourself.