STEC Shares Fall More on Analyst DowngradesFriday, July 29, 2011
Shares of Santa Ana-based solid state storage drive maker STEC Inc. continued to fall Friday after a handful of analyst downgrades.
Investors sent shares down about 4% in afternoon New York trading to a market value of about $518 million. That came on the heels of Thursday’s freefall in afterhours trading that saw shares dip nearly 36%.
Needham & Co., The Benchmark Co., JP Morgan Chase & Co., ThinkEquity, Northland Securities and FBN Securities all downgraded STEC after the company’s earnings report Thursday that missed Wall Street expectations and its outlook well below consensus estimates.
STEC lowered its third-quarter guidance amid increasing competition from lower-priced solid state storage drive makers and weakening demand.
“As a result of several market challenges, our third-quarter results are expected to decline significantly from the second-quarter levels,” Chief Executive Manouch Moshayedi said.
STEC projected an adjusted third-quarter profit of $4.1 million to $5.1 million, which would be about 66% down from a year ago.
Analysts had expected $15.9 million in profits, on average.
STEC said it foresees revenue of $70 million to $72 million for the current quarter, which would be down about 17% from a year earlier.
Wall Street had expected nearly $96 million in revenue.
STEC makes flash memory drives for corporate data networks. The products are known as solid state drives since they have no moving parts, unlike traditional disk drives.
Solid state drives are seen replacing disk drives for high-end corporate data storage because they’re more reliable and cost less to run.