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STEC Shares Soar on Outlook

Shares of Santa Ana’s STEC Inc., which makes flash memory drives for corporate and industrial uses, soared Thursday after the company gave an outlook for the current quarter that beat Wall Street’s expectations.

Investors sent shares up more than 18% in afterhours trading on a recent market value of $310 million.

For the first quarter, STEC said it’s expecting profits, excluding one-time charges, of $5 million to $6 million on sales of $58 million to $60 million.

Wall Street analysts, on average, had been looking for profits of $2.5 million on sales of $46 million.

The rosy outlook comes on the heels of STEC’s fourth-quarter results, which were in line with sales expectations but fell short on profits.

For the three months through December, STEC reported sales of $57 million, up 7% from the same period a year ago and in line with analysts’ expectations.

Excluding charges for stock compensation, taxes, startup expenses for a new plant in Malaysia and other costs, STEC posted profits of about $3.5 million, down 14% from the year-ago quarter and shy of analysts’ expected $4 million in profits.

STEC makes flash memory drives that industry insiders refer to as “solid state” because they have no moving parts. They typically are smaller, more durable and require less electricity to power up and operate.

Last year, STEC rolled out a line of solid state drives that are set to be built into servers made by EMC Corp., Hitachi Data Systems Inc., Sun Microsystems Inc. and others.

The company said it expects sales of the product line, called ZuesIOPS, to double this year to about $100 million in revenue.

“Based on current customer indications and momentum, we believe that revenue from our ZeusIOPS product line,for just the first six months of 2009,will surpass the total of ZeusIOPS revenue achieved during the full-year 2008,” Chief Executive Manouch Moshayedi said.

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