Piper Jaffray raises SanDisk (NASDAQ:SNDK) estimates after their monthly handset channel checks indicate continued strong demand for music-enabled and data-oriented phones.
Firm was particularly encouraged by strong demand for the Nokia 5300 offering a bundled 1GB microSD card, significantly more memory than most handsets currently available. As consumers store greater quantities of digital music, video, maps and other content on their devices, firm expects densities of bundled NAND memory cards and embedded NAND to significantly grow in coming years.
They were also encouraged by solid interest in mobile TV phones at Verizon stores in locations offering mobile TV service. Although these handsets do not yet offer storage capabilities, recent conversations at 3GSM suggest several vendors are considering enabling storage capabilities for mobile TV content. While Piper does not expect mobile TV to significantly drive demand for NAND flash until 2008, they believe this application could require densities significantly beyond SanDisk's average retail capacity of 1.2GB exiting 2006.
Also, firm's Verizon checks indicated growing consumer interest in VZ Navigator, Verizon's location-based service portfolio. They believe growing demand for this feature should drive increased demand for NAND memory required to store location maps. Further, Verizon's growing traction could spur other carriers to offer similar services. Consequently, they expect location-based services to further stimulate NAND memory adoption beginning in 2H07.
While NAND flash pricing has improved 20-30% in recent weeks, firm continues to model 60% year-over-year price declines in 2007 given volatility around recent price fluctuations. However, given indicators of future demand emerging from their checks, firm is raising their 2007 estimates from $1.02/$3.7B to $1.04/$3.8B, and raising their 2008 estimates from $2.46/$5.1B to $2.53/$5.2B.
Notablecalls: Nothing really new and estimate raises are also too small to generate interest.