STEC Hammered After Disappointing OutlookWednesday, May 11, 2011
Shares of Santa Ana-based solid state storage drive maker STEC Inc. plummeted Wednesday, a day after the company offered a disappointing outlook for the second quarter as Japan’s disaster impacts orders.
STEC’s stock closed down nearly 20% to a market value of about $825 million.
The drop came after STEC late Tuesday warned about results for the current quarter.
STEC projected an adjusted second-quarter profit of $11 million to $15.8 million, which would be up as much as two-thirds from a year earlier.
But the forecast fell short of the $16.3 million analysts had been expecting on average.
STEC said it foresees revenue of $80 million to $90 million for the current quarter, which would be up about 50% from a year earlier.
That too fell short of Wall Street expectations, which had been at $93.7 million in revenue.
STEC makes flash memory drives for corporate data networks. The products are known as solid state drives since, unlike traditional disk drives, they have no moving parts.
Solid state drives are seen replacing disk drives for high-end corporate data storage since they’re more reliable and cost less to run.
Some customers are seeing fallout from Japan’s earthquake and tsunami in March, according to STEC.
“While the recent earthquake and tsunami in Japan have not significantly impacted our access to flash memory or other key components, some of our customers have experienced supply chain disruptions,” Chief Executive Manouch Moshayedi said. “Consequently, we anticipate that some of our customers whose supply chains have significant exposure to the most impacted areas of Japan may postpone or reduce their orders for our products in the second quarter.”
The outlook came on the heels of STEC’s first-quarter results, which met or topped expectations.
The company reported an adjusted profit of $16.9 million, reversing a loss a year earlier and matching Wall Street expectations.
Revenue came in at $94.9 million, more than double a year earlier and topping the $93.7 million analysts expected.