Sandisk (SNDK) provides a lot of the guts for Sony-Ericsson (SNE)(ERIC) phones. And, Sony-Ericsson seems unstoppable in the handset market. Its net profit tripled in Q4.
Most of Sony-Ericsson’s strength is in the music and camera enable handset market. Margins in these higher priced phones have not been squeezed the way Nokia and Motorola have been hit because more of their product mix is low cast handsets.
Sandisk needs some help. Its stock has been hammered. It traded near $75 last January. It now changes hands at below $43.
The company had hoped that its portable media player could challenge the Apple (AAPL) iPod, but the the Microsoft (MSFT) Zune hitting the market, the air went out of that balloon.
And, being a supplier to the one large handset company that is doing well could improve Sandisk’s fortunes. But, for how long?
Apple is coming after the high-end cell market with the iPhone. Motorola and Nokia can read the Sony-Ericsson earnings press release as well as anyone else. The money is in more expensive handset.
If Sandisk does better because it is a major supplier to Sony-Ericsson, it better hope that the handset manufacturing joint venture continues to do well. And, that is not a lock.
Douglas A. McIntyre can be reached at [email protected]. He does not own shares in companies that he writes about.
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