SANDISK ANNOUNCES THIRD QUARTER 2009 FINANCIAL RESULTS

Delivers Strong Growth in Revenue & Profits, $220 Million in Free Cash Flow

Milpitas, CA, October 20, 2009 - SanDisk Corporation (NASDAQ:SNDK), the global leader in flash memory cards, today announced results for the third quarter ended September 27, 2009. Total third quarter revenue of $935 million increased 14% on a year-over-year basis and increased 28% on a sequential basis. Net income, in accordance with U.S. Generally Accepted Accounting Principles (GAAP), was $231 million, or $0.99 per diluted share, compared to GAAP net loss of ($166) million or ($0.74) per share in the third quarter of 2008 and GAAP net income of $53 million, or $0.23 per diluted share in the second quarter of 2009.

On a non-GAAP basis, which excludes the impact of acquisition-related charges, share-based compensation expense, and non-cash economic interest expense associated with the cash-settled convertible note, third-quarter net income was $176 million, or $0.75 per diluted share, compared to a net loss of ($132) million or ($0.59) per share in the third quarter of 2008 and net income of $83 million or $0.36 per diluted share in the second quarter of 2009. For reconciliation of non-GAAP to GAAP results, see accompanying financial tables and footnotes.

"Our outstanding Q3 results reflect major gains in our OEM business with strong orders continuing into Q4. Product gross margin improved dramatically, driven by favorable pricing and strong product cost reductions. We are encouraged by improved industry fundamentals and our increasingly diversified global markets, which bode well for further growth in Q4 and in 2010," said Eli Harari, Chairman and CEO, SanDisk.

THIRD QUARTER 2009 METRICS & HIGHLIGHTS

Free cash flow generated was $220 million.
Total cash and equivalents, short and long-term investments at the end of the third quarter were $2.58 billion compared to $2.64 billion at the end of the third quarter of 2008 and $2.34 billion at the end of the second quarter of 2009.
Total revenue was $935 million, up 14% year-over-year and up 28% sequentially.
- Product revenue was $814 million, up 18% year-over-year and up 33% sequentially.
- License and royalty revenue was $121 million, down 8% year-over-year and up 1% sequentially.
GAAP product gross profit was $315 million, or 39% of product revenue, compared to GAAP product gross loss of ($138) million, or (20%) of product revenue, in the third quarter of 2008 and GAAP product gross profit of $129 million, or 21% of product revenue, in the second quarter of 2009. Third quarter product gross profit included a $139 million benefit primarily from the sale of previously reserved inventory.
Non-GAAP product gross profit was $320 million, or 39% of product revenue, compared to non-GAAP product gross loss of ($121) million, or (17%) of product revenue, in the third quarter of 2008 and non-GAAP product profit of $134 million, or 22% of product revenue, in the second quarter of 2009. Third quarter product gross profit included a $139 million benefit primarily from the sale of previously reserved inventory.
GAAP operating profit was $240 million, or 26% of total revenue, compared to GAAP operating loss of ($250) million, or (30%) of total revenue, in the third quarter of 2008 and GAAP operating profit of $68 million, or 9% of total revenue, in the second quarter of 2009.
Non-GAAP operating profit was $263 million, or 28% of total revenue, compared to non-GAAP operating loss of ($205) million, or (25%) of total revenue, in the third quarter of 2008 and non-GAAP operating profit of $94 million, or 13% of total revenue, in the second quarter of 2009.
Total units sold increased 31% year-over-year and increased 45% sequentially.
Gigabytes sold increased 107% year-over-year and increased 37% sequentially.
Average price per gigabyte sold declined 43% year-over-year and declined 3% sequentially.
Average retail card capacity was 4.22 gigabytes, an increase of 46% on a year-over-year basis and a decrease of 1% sequentially.

OTHER RECENT KEY ANNOUNCEMENTS

SanDisk began shipping the industry's first 8 gigabyte (GB)¹ and 16GB SDHC™ and 8GB Memory Stick PRO Duo™ cards using four bits per cell memory technology.
SanDisk began shipping the industry's fastest SanDisk Extreme® Pro™ Compact Flash® memory card with read and write speeds up to 90 megabytes per second² and with capacities ranging from 16GB to 64GB.
SanDisk launched the Sansa® Clip+ MP3 player that features a microSD™ memory card slot. The Sansa Clip+ MP3 player is fully compatible with SanDisk slotRadio™ and slotMusic™ cards, as well as any microSD™ card pre-loaded with music.

CONFERENCE CALL

SanDisk's third quarter 2009 conference call is scheduled for 2:00 P.M., Pacific Time, Tuesday, October 20, 2009, with SanDisk CEO Eli Harari joining the call from SanDisk's Shanghai facility. The conference call will be webcast and can be accessed live, and throughout the quarter, at SanDisk's website at http://www.sandisk.com/IR. To participate in the call via telephone, the dial-in number is 913-312-0702 and the dial-in password is 8643791. A copy of this press release will be furnished to the Securities and Exchange Commission on a current report on Form 8-K and will be posted to our website prior to the conference call.
¹ 1 GB = 1 billion bytes.
² Based on internal testing; performance may vary depending upon host device.

SCHEDULED INTERVIEWS

SanDisk Corporation President and Chief Operating Officer, Sanjay Mehrotra, is scheduled to appear on CNBC's "Closing Bell with Maria Bartiromo," on October 20, 2009, at approximately 1:10 P.M., Pacific Time.

SanDisk Corporation Executive Vice-President Administration and Chief Financial Officer, Judy Bruner, is scheduled to appear on Bloomberg Television on October 21, 2009, at approximately 6:35 A.M., Pacific Time.

A complete reconciliation between GAAP and non-GAAP information referred to in this release is provided in the attached tables.

FORWARD LOOKING STATEMENTS

This news release contains certain forward-looking statements, including statements about our business prospects and outlook, our expectations for the fourth fiscal quarter of 2009, and fiscal 2010, and our expectations regarding our business, including our OEM business, that are based on our current expectations and involve numerous risks and uncertainties that may cause these forward-looking statements to be inaccurate and may significantly and adversely affect our business, financial condition and results of operations. Risks that may cause these forward-looking statements to be inaccurate include among others:

slower than expected, or no, growth in market demand for our products or a slower adoption rate for our products in markets that we are targeting including through new channels,
reduced demand or consumer confidence due to the continuing global economic downturn,
over-supply in the markets that we serve,
declines in average selling prices,
any interruption of or delay in supply from any of the semiconductor manufacturing or subcontracting facilities, including test and assembly facilities that supply products to us,
slower than expected expansion of our global sales channels,
fluctuations in operating results, unexpected yield variances and delays related to our conversion to smaller geometries of NAND flash technology,
increased memory component and other costs as a result of currency exchange rate fluctuations to the U.S. dollar, particularly with respect to the Japanese yen,
business interruption due to earthquakes, hurricanes or other natural disasters, particularly in areas in the Pacific Rim and Japan where we manufacture and assemble products,
adverse results in litigation or regulatory actions affecting us
other risks detailed from time-to-time under the caption "Risk Factors" and elsewhere in our Securities and Exchange Commission filings and reports, including, but not limited to, our Annual Report on Form 10-K/A for the fiscal year ended December 28, 2008 and Quarterly Report on Form 10-Q for the second quarter ended June 28, 2009.

Future results may differ materially from those previously reported. We do not intend to update the information contained in this release.

ABOUT SANDISK
SanDisk Corporation, the inventor and world's largest supplier of flash storage cards, is a global leader in flash memory - from research, manufacturing and product design to consumer branding and retail distribution. SanDisk's product portfolio includes flash memory cards for mobile phones, digital cameras and camcorders, digital audio/video players, USB flash drives for consumers and the enterprise, embedded memory for mobile devices, and solid state drives for computers. SanDisk (www.sandisk.com/corporate) is a Silicon Valley-based S&P 500 company with more than half its sales outside the United States.

SanDisk, the SanDisk logo, Sansa, CompactFlash and SanDisk Extreme are trademarks of SanDisk Corporation, registered in the United States and other countries. slotRadio is a trademark of SanDisk Corporation. slotMusic is a trademark of SLOTmedia Group LLC. SDHC and microSD are trademarks of SD-3C LLC. Memory Stick PRO Duo is a trademark of Sony Corporation. Other brand names mentioned herein are for identification purposes only and may be the trademarks of their respective holder(s).

SanDisk Supporting Documents (.pdf)

CONTACT:
Investor Contact:
Jay Iyer
(408) 801-2067

Media Contact:
Ryan Donovan
(408) 801-2857