Releases

posted on 06 March 2008 17:15

SANTA ANA, Calif., March 5, 2008 (PRIME NEWSWIRE) -- STEC, Inc. (NasdaqGS:STEC - News), announced today the company's financial results for the fourth quarter and full-year ended December 31, 2007.

Revenue for the fourth quarter of 2007 was $53.0 million, a decrease of 28.7% from $74.3 million for the fourth quarter of 2006, and an increase of 18.6% from $44.7 million for the third quarter of 2007.

Non-GAAP gross profit margin was 31.7% for the fourth quarter of 2007, compared to 33.9% for the fourth quarter of 2006, and 31.1% for the third quarter of 2007. Non-GAAP diluted earnings per share was $0.07 for the fourth quarter of 2007, compared to $0.19 for the fourth quarter of 2006, and $0.05 for the third quarter of 2007. GAAP results in the fourth quarter of 2007 included start-up costs related to the Company's Malaysia facility, Solid State Drive (SSD) product development expense, global tax restructuring costs, first-year implementation costs related to Sarbanes-Oxley Act Section 404, Consumer Division sale-dispute arbitration fees, employee stock compensation expense and the short-term impact of the implementation of the global tax restructuring on the Company's effective tax rate. Non-GAAP results are explained and reconciled to GAAP results in tables included in this release.

GAAP gross profit margin was 30.0% for the fourth quarter of 2007, compared to 33.9% for the fourth quarter of 2006, and 29.0% for the third quarter of 2007. GAAP diluted earnings per share from continuing operations was $0.03 for the fourth quarter of 2007, compared to $0.19 for the fourth quarter of 2006, and $0.01 for the third quarter of 2007.

GAAP full-year 2007 revenue was $188.7 million, a decrease of 12.6% from $215.8 million for 2006. GAAP gross profit margin was 30.2% for 2007, compared to 31.7% for 2006. GAAP full-year 2007 diluted earnings per share from continuing operations was $0.11, compared to full-year 2006 diluted earnings per share from continuing operations of $0.45.

During the fourth quarter of 2007, the Company repurchased 335,847 shares of common stock under its previously announced stock repurchase program at an average price, including commissions, of $7.48. The Company repurchased 1,669,208 shares during the first quarter of 2008 to date. Since the inception of the stock repurchase program in July 2006 through February 29, 2008, the Company has repurchased an aggregate of 2,005,055 shares of common stock at an average price, including commissions, of $7.74 per share.

Business Outlook

Solid State Drive Initiatives -- Enterprise Storage, Enterprise Servers and Laptops

Enterprise-Storage market -- ZeusIOPS

"We believe that we are the leading-technology company providing Solid State Drive solutions (SSD) to Original Equipment Manufacturers (OEMs) in three major markets,' said Manouch Moshayedi, STEC's chief executive officer. "We believe this position of leadership coupled with our just-completed Malaysia production and engineering facility, and the implementation of our global tax restructuring has placed STEC in the most competitive and exciting position since the company was founded more than 18 years ago.

"At this time last year, I shared my enthusiasm for our then newly-developed ZeusIOPS line of SSDs targeted to the Enterprise-Storage Market. We set a hopeful, early-stage revenue goal of $5 million to $10 million for 2007. We not only surpassed that goal, but more importantly announced in early 2008 the adoption of our ZeusIOPS line of SSDs by one of the largest Enterprise-Storage manufacturers, for integration into their high-performance systems.'

Enterprise-Server market -- Mach8/IOPS

"In November of 2007 we introduced our Mach8/IOPS line of SSDs giving Enterprise-Server system providers increased performance while decreasing their customers' power consumption and total cost of ownership. The Mach8/IOPS will enable our Enterprise-Server OEM customers to achieve high read and write IOPS performance at a competitive cost. Several of the leading Enterprise-Server OEMs are currently testing our Mach8/IOPS and we are very encouraged by the results to date. We expect sampling and testing for Mach8/IOPS to continue for the next two to three quarters and are hopeful to begin volume production during future quarters.'

Laptops and Portables market -- Mach8 with SLC and Mach8 with MLC

"In December of 2007 we introduced our Mach8 line of SSDs which we plan to sell directly to laptop OEM customers. With the cost of SSDs still a prohibitive factor when used in laptops, we became the first company to introduce an SSD using significantly lower-priced -- MLC-based -- NAND Flash chips. The introduction of our Mach8 with MLC stands to significantly reduce the cost of SSDs for laptops. We are encouraged by the positive initial feedback from many of the leading OEMs who are sampling and testing our Mach8 with MLC. We are also hopeful that we will begin volume production with this product during future quarters.'

Malaysia Facility

"As forecasted, we moved into our Penang facility in early January of this year. Our new Malaysian facility is now operational and is expected to ramp up to meaningful-production levels by the end of the second quarter of 2008. We have already achieved ISO certification and successfully completed several significant customer audits. We expect our investment in this new facility to help reduce average production and administrative costs, improve access to growing markets in Asia, improve supply-chain efficiency and significantly lower our overall long-term effective corporate tax rate.'

Guidance

"We currently expect first quarter of 2008 revenue to range from $45 million to $47 million with diluted non-GAAP earnings per share to range from $0.02 to $0.03. We are excited about our future in the ever-expanding Enterprise-SSD markets, the opening of our Malaysia facility, the implementation of our long-term global tax restructuring and what execution of these initiatives mean to STEC's look to the future.'

About STEC, Inc. (NasdaqGS:STEC - News)

STEC, Inc. designs, develops, manufactures and markets custom memory solutions based on Flash memory and DRAM technologies. For information about STEC and to subscribe to the Company's "Email Alert' service, please visit our web site at http://www.stec-inc.com, click "About STEC,' click "Investor Relations' and then "Email Alert.'