STEC's Higher Operating Expenses Lead To Loss

The technology company posted a net loss in the fourth quarter, as revenue from DRAM-related products plunged.
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On March 12, 2009,

STEC Incorporated


reported that it swung to a net loss during Q4 FY08 due to higher operating expenses. Net loss was $171,000 or breakeven per share compared to net income of $1.11 million or $0.02 per share in Q4 FY07. Income from continuing operations on a non-GAAP basis dropped 26.4% to $2.52 million or $0.05 per share, missing the most recent consensus estimate of $0.08 per share.

Revenue increased 7.4% to $56.92 million from $53.01 million a year ago. Product-wise, Flash-related products' revenue rose 19.5% sequentially to $48.40 million. However, DRAM-related products' revenue plunged 63.8% to $7.90 million. Service revenue was $600,000 during the fourth quarter. The average sales price for non-service revenue was $38.00 per unit, up from $36.00 per unit in Q3 FY08. The company shipped 1.20 million total non-service units, a decrease from 1.70 million units in Q3 FY08. Average shipment density of memory products increased 126.7% quarter-over-quarter to 3.40 gigabytes.

STEC authorized a stock repurchase program up to $10.00 million over an 18-month period commencing November 19, 2008. Additionally, the company repurchased 1.73 million shares at an average price of $3.75 per share. Meanwhile, Raymond D. Cook was appointed as the company's CFO effective November 11, 2008.

Recently, the company began reducing its workforce at its Santa Ana, California headquarters as part of the transition of certain of its operations to its new manufacturing facility in Penang, Malaysia.

For FY08, total revenues escalated 20.6% to $227.45 million from $188.65 billion in FY07. However, earnings plummeted 57.1% to $4.29 million or $0.08 per share from $10.01 million or $0.19 per share a year ago.

Looking forward to Q1 FY09, the company expects revenue to be in the range of $58.00 million to $60.00 million and non-GAAP earnings in the range of $0.10 per share to $0.12 per share.