SanDisk slashes prices and cuts workforce

Increased competition hits Flash memory company hard

Tough market conditions have caused Flash memory company SanDisk to slash its prices and cut its workforce. The Californian company, which is also responsible for the hugely successful Sansa MP3 players, is making the changes amid fierce competition from its rivals.

The good news for the general consumer is that SanDisk flash memory products are to become up to 40% cheaper, and will remain at those prices until the market stabilises. Prices will inevitably go back up again at some point, so if you need a new USB flash drive for example, there has never been a better time to buy.

Eli Harari, CEO of SanDisk said, "Although we believe there will be strong pickup in demand for our products in the second half of the year, we do not have visibility as to when the current aggressive pricing cycle will run its full course, and gross margins are likely to remain under significant pressure for several quarters."

SanDisk is also gearing up to axe 250 jobs - approximately 10 percent of its workforce. These cuts will primarily occur in early March, and will reflect the decision SanDisk recently made to de-emphasise the its unbranded flash drive business in favour of the more profitable SanDisk branded models.

The company is further cutting its wage bill by reducing the salaries of its executives, including a 20 per cent pay cut for Eli Harari himself. The salaries of those employees who stay on will be frozen until further notice and no new staff will be taken on.

SanDisk estimates that these arguably extreme measures could save it as much as £28 million.

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