Stec: Fiscal 4Q10 Financial Results

STEC, Inc. announced financial results for the fourth quarter and full-year ended December 31, 2010.

Revenue for the fourth quarter of 2010 was $93.9 million, a decrease of 11.4% from $106.0 million for the fourth quarter of 2009 and an increase of 9.1% from $86.1 million for the third quarter of 2010.

GAAP gross profit margin was 45.2% for the fourth quarter of 2010, compared to 50.9% for the fourth quarter of 2009 and 46.4% for the third quarter of 2010. GAAP diluted earnings per share from continuing operations was $0.34 for the fourth quarter of 2010, compared to $0.47 for the fourth quarter of 2009 and $0.26 for the third quarter of 2010.

Non-GAAP gross profit margin was 45.3% for the fourth quarter of 2010, compared to 51.0% for the fourth quarter of 2009 and 46.5% for the third quarter of 2010. Non-GAAP diluted earnings per share from continuing operations was $0.35 for the fourth quarter of 2010, compared to $0.51 for the fourth quarter of 2009 and $0.31 for the third quarter of 2010.

Revenue for full-year 2010 was $280.1 million, a decrease of 20.9% from $354.2 million for 2009. GAAP gross profit margin was 43.4% for 2010, compared to 47.7% for 2009. GAAP full-year 2010 diluted earnings per share from continuing operations was $0.56, compared to full-year 2009 diluted earnings per share from continuing operations of $1.41.

Non-GAAP gross profit margin was 43.6% for full-year 2010, compared to 48.4% for 2009. Non-GAAP diluted earnings per share from continuing operations was $0.69 for full-year 2010, compared to $1.61 for 2009.

"I am very pleased with our fourth quarter 2010 revenue, margin, and EPS results," said Manouch Moshayedi, STEC’s Chairman and Chief Executive Officer. "We surpassed our guidance for the fourth quarter and have set the stage for a successful first quarter 2011. Moreover, we had our best quarter ever for shipments of our flagship ZeusIOPS Solid-State drives (SSDs) with ZeusIOPS revenues for the fourth quarter of 2010 increasing to $74.9 million from $74.0 million in the fourth quarter of 2009, and from $59.1 million in the third quarter of 2010.

"During 2010, we expanded our leading position in the Enterprise-SSD market increasing the number of our Enterprise-Storage and Enterprise-Server customers that have qualified our SSDs. In addition, we executed on our strategy to diversify our customer base by increasing the number of OEM SSD customers that contributed 10% or more of our revenue to three for full-year 2010 compared to one such customer for full-year 2009.

"Furthermore, our MLC-based ZeusIOPS SSDs enabled by our proprietary CellCare technology have now been qualified and are available to our OEM customers on a production-level basis. We believe this sends an important signal that high-performance MLC-based SSDs are ready for the Enterprise-Storage market.

"During the fourth quarter of 2010, our mix of ZeusIOPS SAS interface SSDs grew to 42% of our total ZeusIOPS sales from 20% in the third quarter of 2010. Furthermore, we believe that sales of our SAS ZeusIOPS SSDs will exceed that of our Fibre Channel ZeusIOPS SSDs during the first quarter of 2011. This marks an important transition of our customers to the highest-performance technologies and highlights our adaptability to the rapidly evolving storage industry.

"Ultimately, we believe that these milestones along with the increasing awareness and knowledge of the benefits of Enterprise SSDs by our OEM customers and their end-user customers, will contribute to a strong first quarter 2011."

STEC’s current expectation
for the first quarter of 2011 is as follows:

• Revenue to range from $90 million to $92 million.
• Diluted non-GAAP income per share to range from $0.32 to $0.34.