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STEC Continues Slide on Competition Concerns

Shares of Santa Ana’s STEC Inc., a highflying maker of flash memory drives for corporate and industrial uses, continued a bearish turn on Monday after an analyst recently expressed concerns about looming competition.

STEC’s shares closed down 5% on a recent market value of $1.4 billion.

Late last week, a Wedbush Morgan Securities LLC analyst cut STEC’s price target to $39 per share from $45 per share, citing more competition for solid state drives, which have no moving parts and are seen as replacing disk drives in computers, servers and consumer electronics.

The stock closed at around $29 per share on Monday.

The analyst said in a research note that competition is “intensifying above our previous expectations,” according to a report on financial news site TheStreet.com.

On Monday, STEC responded to concerns with the publication of a white paper that attempted to downplay the competitive threat from companies such as Fountain Valley’s Kingston Technology Co. and Irvine’s Toshiba America Electronic Components Inc., the storage unit of Japan’s Toshiba Corp.

In the paper, STEC said it seeks to differentiate between solid state drives geared toward consumers and drives that are geared towards larger corporations, such as banks and retailers, which have to keep and retrieve a lot of data.

“Not all solid state drives that are being directed at the high-end enterprise market are equally-suited for these applications,” the company said. “While consumer grade solid state drives may be available from multiple sources and may be offered at seemingly attractive price points, these solid state drives are not capable of or well-suited for deployment in a mission critical data center.”

STEC has enjoyed an early technology lead that’s given it a virtual monopoly for solid state drives used by businesses.

Because it was first to market, the company has landed design wins with several industry heavyweights, including Hopkinton, Mass.-based EMC Corp.

STEC has seen a tremendous run up this year,shares are up more than 500% since the start of the year.

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