STEC Inc.’s downward spiral from its boom days in 2009 has been unrelenting.
Its market value that year topped $1.5 billion, its share price climbed more than 800%, and it posted record sales of $354.1 million.
The Santa Ana-based disk drive maker was a Wall Street darling, prompting analysts to rank its stock a top pick of the year. It had an iron-clad hold on what’s referred to as enterprise-grade solid-state drives, or flash drives used in corporate data rooms.
Founders Manouchehr Moshayedi and Mark Moshayedi were lauded for their early lead.
The company was joined at the hip with Hopkinton, Mass.-based EMC Corp., which makes data storage computers and centers. EMC accounted for more than 45% of the company’s revenue in 2009, or some $160 million.
STEC also had design wins with other data storage computer makers, including IBM, Hewlett-Packard Co., Hitachi Data Systems Corp., Sun Microsystems Inc. and Fujitsu Ltd.
Its reliance on a small group of original equipment manufacturers was barely a concern until STEC gave a conservative outlook in late 2009, hinting that EMC had a stockpile of its drives that would slow down orders.
Big competitors entered the fray within months, including Irvine-based Western Digital Corp., Cupertino-based Seagate Technology LLC and Kingston Technology Co. in Fountain Valley.
“When the market becomes big enough, we will see where the chips fall,” then-STEC President Mark Moshayedi told the Business Journal in early 2010.
It’s hard to find an investor or analyst who’s betting on the company these days.
STEC lost its early lead in the solid-state drive market as OEM customers sought second and third suppliers. Revenue began to slide even as global sales for solid-state drives escalated.
Its top three customers—EMC, IBM and Hitachi—accounted for about 70.2%, or some $216.2 million, of its $308 million in sales in 2011.
The company recently disclosed in its annual report that those customers accounted for no more than 45.7% of its $168.3 million in sales in 2012, or roughly $76.9 million. That amounts to a 65% drop in revenue from those companies in one year.
STEC’s inability to swiftly react to changing market dynamics has prompted investors to call for sweeping changes to its management team and directors. It appears headed to a proxy fight with its largest investor, Balch Hill Partners, a San Francisco-based private equity firm.
Mark Moshayedi took the interim chief executive title last year after his brother resigned from the post amid insider trading allegations by the Securities and Exchange Commission.
The company recently initiated a direct sales program in a bid to move beyond OEM customers and win business in the oil and gas, federal government, telecommunications, financial services, cloud and social media markets.
It bears watching if the company can make gains by casting a wider net.
It projected sales between $21 million and $23 million in the recently ended quarter and a loss of $18.7 million to $19.6 million, on par with analyst estimates.
Landfill Project
Newport Beach-based FirmGreen Inc. recently received the Renewable-Energy Exporter of the Year award from the Export-Import Bank of the United States.
“FirmGreen is a great example of how American companies can remain globally competitive in the renewable energy sector,” Export-Import Bank Chairman and President Fred Hochberg said in a statement.
The company is in the midst of a power plant project in Brazil to produce biofuels and other renewable energy sources from the world’s most notorious landfill.
The 30-year Jardim Gramacho dump project is its first large-scale project to convert methane gas into clean energy. The dump daily collected some 8,000 tons of garbage until the Brazilian government shut it down last year.
The project is valued at more than $100 million, with FirmGreen in line for a third of the deal.
The company partnered with Gás Verde SA and Petroleo Brasileiro, both of which project partners say holds the potential to produce the equivalent of 22 million gasoline gallons of compressed natural gas annually.
Gás Verde was approved for a $48.6 million loan from Export-Import Bank to help fund the Gramacho project. The loan application counted on FirmGreen’s technology.
The loan generated 165 new jobs, with some at FirmGreen and the bulk at subcontractors in Indiana, Wisconsin, Ohio, California, Michigan, Missouri, Texas and Brazil, according to FirmGreen.
FirmGreen sees about $200 million in revenue annually.
Company representatives just wrapped up a three-day trade mission to Cairo at the request of the U.S. Department of Commerce International Trade Administration. Other invitees included Google, SunEdison and Raytheon Technical Services.
Chris Casacchia can be reached at casacchia@ocbj.com.
