SanDisk's modest revenue forecast prompts selloff

Some analysts have recently pointed to signs that NAND prices are stabilizing after Japanese chipmaker Toshiba scaled back production last year.

"We think we're still better than seasonal in pricing because there's no new supply coming on line. That's the key metric. Demand will take care of itself," said Kevin Cassidy, an analyst at Stifel Nicolaus.

Last year Apple Inc, a major purchaser of NAND chips worldwide, accounted for almost 13 percent of SanDisk's business, Bruner said.

Apple missed revenue expectations for the third straight quarter after sales of its flagship iPhone came in below Wall Street's targets.

SanDisk's gross margin in the December quarter improved to 39 percent from 30 percent in the September quarter. For the March quarter, SanDisk expects a gross margin of 38 percent, plus or minus 2 percentage points.

Pacific Crest analyst Monika Garg said investors are adjusting to slower growth in the NAND chip industry after years of explosive expansion.

The chipmaker earned $214 million, or 87 cents per share, in the December quarter, compared to $281 million, or $1.14 per share, in the year-ago period.

Revenue fell 2 percent year over year to $1.54 billion.

Analysts on average were expecting revenue of $1.526 billion in the fourth quarter.

Excluding items, it earned $1.05 a share. Analysts had expected earnings of 76 cents a share.