By BETSY SCHIFFMAN, AP

NEW YORK (AP) - Shares of SanDisk Corp. dropped nearly 16 percent in afternoon trading on Monday after chipmakers Intel Corp. and Micron Technology Inc. announced a NAND flash memory joint venture, which could put the squeeze on the company.

Shares of the Sunnyvale, Calif.-based flash memory card maker, which have traded between $20.25 and $65.49 over the last year, dropped by $8.82, or 15.7 percent, to $47.38 in midday trading on the Nasdaq.

The stock sank after chip giants Intel and Micron said they will form a joint venture, to be called IM Flash Technologies, which, analysts said, could take a bite out of SanDisk`s marketshare and lessen the company`s control of flash memory prices.

``This venture is probably going to be a substantial threat to SanDisk,`` said Oppenheimer & Co. analyst Vijay Rakesh, who recently initiated coverage on the stock with a ``Neutral`` rating. ``Intel and Micron don`t have to pay royalties to SanDisk - and right now SanDisk makes about 15 percent of its revenues, or 40 percent of its operating profit, from royalties. Plus Intel and Micron can increase memory supply and put pricing pressure on SanDisk.``

SanDisk, which has its own manufacturing facility, could see margins erode as prices come down, said Robert W. Baird & Co. analyst Tristan Gerra.

``Intel has the reputation of being very aggressive, in terms of pricing, and Micron has the reputation for providing high-quality memory products. The combination of these two companies makes the venture very competitive. It could mean that SanDisk may have to make more aggressive price adjustments at the retail level,`` Gerra said.

Analysts polled by Thomson Financial expect the company, on average, to earn 59 cents per share for the fourth quarter, on $712.69 million in revenue.

11/21/05 12:09 EST