Shares of Santa Ana’s STEC Inc., a maker of flash memory drives for corporate and industrial uses, jumped on Thursday after the company gave a better than expected outlook for the current quarter.
Investors sent the stock up 4.3% in afterhours New York trading on a recent market value of $666 million.
STEC said it’s looking for second-quarter sales of $48 million to $50 million, surpassing analysts’ average revenue estimate of $37 million.
For profits, the company is expecting to break even or a loss of $1.5 million, less than the $5 million loss analysts had been expecting.
“We exceeded our original projections including both revenue and earnings guidance while continuing to generate positive cash flow from operations,” Chief Executive Manouch Moshayedi said.
The improved outlook comes on the heels of STEC’s first-quarter results, in which the company swung to a loss but still beat Wall Street’s targets.
For the three months through March, STEC reported sales of $39 million, down 39% from the same quarter a year earlier and beating analysts’ expected $34 million in revenues.
Excluding charges for stock compensation, income taxes and other one-time costs, STEC swung to a loss of $5 million, versus a profit of $9 million in the year-ago quarter but less than the $7 million loss analysts were expecting.
Thursday’s bullish run is reversing a downward trend STEC has seen for around eight months over concerns about competition and slowing sales of STEC’s drives that use flash memory chips instead of spinning disks to store huge amounts of data for banks and retailers.
In September, STEC gave a conservative outlook for the fourth quarter and hinted that its top customer, EMC Corp. had a stockpile of drives and would slow its ordering.
Analyst downgrades and a flurry of shareholder lawsuits followed.
The news sent shares plummeting and STEC lost two-thirds of its value by the end of 2009.
Its December quarter results missed Wall Street’s estimates by half as EMC stopped ordering altogether, slashing STEC’s top line.
Chief Executive Moshayedi said that EMC’s inventories are getting back to normal, hinting that it’s set to resume ordering drives from STEC.
“Previously, we had stated that the first half of 2010 would be a trough period for our business due to an inventory carryover from 2009 into this year by our largest customer,” he said. “While we don’t have full visibility into customer inventory levels, we have now received indications that the inventory situation has been substantially resolved, including receipt of new purchase orders for deliveries of our ZeusIOPS during the current quarter.”
