Shares of Santa Ana’s STEC Inc., a maker of flash memory drives for corporate and industrial uses, slumped Tuesday, a day after the company said its executives are set to sell off shares.
Investors sent STEC’s stock down nearly 8% Tuesday on a recent market value of $1.6 billion.
Chief Executive Manouch Moshayedi and Chief Operating Officer Mark Moshayedi are set to sell 7.5 million shares, according to a conference call held after the close of trading on Monday.
The two will remain big shareholders in the company and continue their executive roles at STEC, which they started nearly two decades ago.
The move likely is an effort to diversify their wealth by reinvesting some of the money they’ve made at STEC.
The two have been regularly selling off shares in the company.
But the latest sale comes at a high point in STEC’s shares, which are up nearly 700% since January with a market value of $1.6 billion.
The money that the Moshayedis are taking out of STEC isn’t set to be reinvested to help STEC grow,another point of concern for investors and shareholders.
“Despite the lack of dilution and orderly disposal, if the stock is down on Tuesday this would be why,” said Richard Kugele, an analyst at Needham & Co. LLC, said in a research note. “It’s not because of the quarter.”
The stock sale announcement came on the heels of STEC’s results for the three months through June, which were announced on Monday.
STEC handily beat Wall Street’s expectations for both sales and profits.
For the second quarter, STEC reported $20 million in adjusted profits on sales of $86 million. Sales more than doubled and profits more than quadrupled from the same period a year earlier.
It ended the quarter with $94 million in cash and short-term assets.
For the current quarter, STEC said it expects to see profits of about $22 million to $23 million on sales of $95 million to $97 million.
Analysts, on average, are looking for third quarter profits of roughly $19 million on sales of $96 million.
