Stec forecasts weak 3Q, stock tumbles 36 percent

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SANTA ANA, Calif. (AP) — Data storage device maker Stec Inc. on Thursday forecast third-quarter results well below what Wall Street was expecting, saying customers are seeking out cheaper alternatives to its solid-state drives.

Its shares fell 36 percent in extended trading.

In a statement, Stec CEO Manouch Moshayedi said that “market challenges” will cut into its July-September results. He said the company believes some of its OEM — or original equipment manufacturer — customers are switching to cheaper products instead of using its drives, in order to build more inexpensive electronics. The company said competition is also resulting in fewer orders.

For the current quarter, Stec said it expects adjusted earnings of 8 cents to 10 cents per share on $70 million to $72 million in revenue.

Analysts polled by FactSet had been expecting adjusted net income of 31 cents per share on $95.7 million in revenue.

Stec shares fell $5.96 to $10.74 in after-hours trading. The stock had finished regular trading up 20 cents at $16.70

For the April-June quarter, Stec reported it earned $9.7 million, or 18 cents per share, compared with $2.8 million, or 6 cents per share, in the year-ago quarter.

Excluding special items, the company earned 23 cents per share, a penny below than what analysts were expecting.

Revenue climbed 34 percent to $82.5 million; analysts expected $83.9 million.