Shares of Santa Ana’s STEC Inc., a maker of flash memory drives for corporate data networks, slumped Monday, despite a better than expected outlook for the current quarter.
For the first quarter, STEC said it’s expecting to see sales of $90 million to $92 million, more than double from a year earlier and topping the $85 million in revenue expected on average by analysts.
Excluding onetime items, STEC is expecting profits of $16 million to $17 million, up from a loss of $4 million a year earlier and topping the $12 million expected by Wall Street.
STEC’s shares closed on the down side of flat Monday on a market value of $1.2 billion.
Investors may have jumped to the bear camp on concerns over competition from other makers of what’s called solid state drives, which have no moving parts and are better at some tasks than traditional disk drives.
Until this year, STEC had the bulk of the market for solid state drives. Others have been creeping in as their products get qualified with big makers of servers for corporate networks, including Irvine’s Western Digital Corp., Scotts Valley’s Seagate Technology LLC and others.
“So we are right now in a period where we feel that we already have legitimate competitors in the market,” Chief Executive Manouch Moshayedi in a call with analysts. “Even with that, as you can see, Q1 is much higher than we had anticipated previously and we are having our best Q1 ever … I think the market growth is overcoming the fact that competition is arriving in these markets.”
The outlook came on the heels of STEC’s fourth-quarter results, which were down considerably from a year ago but still beat analysts’ expectations.
The company saw sales of $94 million, down 11% from a year ago but ahead of analysts’ expected $90 million in revenue.
Excluding write-downs on assets, restructuring charges and other one-time costs, the company posted profits of $18 million, down about 30% from a year earlier but still surpassing analysts’ expected $17 million in profits.
