SanDisk shares drop in premarket trading, CEO Eli Harari to retire

Ahead of the Bell: SanDisk shares fall

NEW YORK — Shares of SanDisk Corp. dropped in premarket trading Friday after the flash memory maker said its CEO, chairman and founder Eli Harari plans to retire this year.

SanDisk said Thursday Harari will step down Dec. 31. Chief Operating Officer Sanjay Mehrotra will become CEO. The company also posted second-quarter earnings above Wall Street’s expectations.

But investors seemed concerned about Harari’s retirement and sent SanDisk’s shares down 6 percent to $40.53 in premarket trading Friday. The stock had closed at $43.10 Thursday.

Oppenheimer analyst Gary Hsueh said SanDisk blew out the quarter’s numbers “where it counts most — margins.” He said the two plausible factors for the stock trading lower are Harari’s retirement or that, while the company’s guidance was strong, it was “not exactly a big positive surprise.”

Hsueh, who rates SanDisk “Perform,” said the latter was the likely culprit. The company forecast third-quarter revenue of about $1.18 billion to $1.25 billion. Analysts polled by Thomson Reuters are expecting $1.25 billion.