SanDisk shares skidded 30 percent Wednesday  after the maker of chips for memory cards reported dismal third-quarter earnings and prospective acquirer Samsung Electronics withdrew a $5.85 billion takeover offer.

Shares plummeted $4.50 to $10.27  in afternoon trading.

In a letter to SanDisk management dated October 22, Samsung Chief Executive Yoon Woo Lee expressed frustration at the failure to achieve “meaningful progress” on a transaction after nearly six months. He said the company was withdrawing the $26 per share offer.

There are “growing uncertainties in your business, which may continue to deteriorate ...Your recently announced third-quarter results serve only to illustrate this risk,” he wrote.

In response, SanDisk’s board of directors issued a letter implying that Samsung, a competitor in the NAND flash space, may have ulterior motives in pursuing and then dropping the acquisition. The board said that it had been open to a transaction and charged that Samsung had ignored its outline for further negotiations.

“We believe this raises questions about the real motivations behind Samsung’s offer,” the letter said.

On Monday, SanDisk posted a third-quarter net loss of $155.2 million, or $0.69 per diluted share, on revenue of $821.5 million, a 20.8 percent year-over-year decrease.

SanDisk had received the $26 per share acquisition proposal on August 9, but its board rejected the unsolicited proposal.

In August, industry tracker ISuppli predicted that the average sales price of NAND flash would fall by about 60 percent in 2008.

iSuppli ranked Samsung as the No. 1 NAND flash maker with a 42.3 percent share, followed by Toshiba, and South Korea’s Hynix Semiconductor.

Milipitas, California-based SanDisk operates two factories jointly with Toshiba in Japan. On Monday, Toshiba said it would buy 30 percent of the plants’ production capacity while the two companies will split the remainder.

The flash market rests heavily on the supply situation and consumer demand for items like MP3 players and digital cameras. New solid-state disk drives, which are beginning to show up in laptops like the Apple Macbook Air could provide a new source of demand for flash memory.

On the earnings call, SanDisk Chief Executive Eli Harari said solid-state drives, an immature market, would not relieve “inventory overhang” in 2009, though mobile phone demand could drive flash memory demand.