sTec: Fiscal 1Q13 Financial Results
Cannot be worst.
This is a Press Release edited by StorageNewsletter.com on May 9, 2013 at 2:56 pm| (in US$ million) | 1Q12 | 1Q13 |
| Revenues | 50.4 | 22.0 |
| Growth | -56% | |
| Net income (loss) | (10.7) | (25.5) |
sTec, Inc. announced thefinancial results for its first quarter ended March 31, 2013.
Revenue for the first quarter of 2013 was $22.0 million, a decrease of 56.3% from $50.4 million for the first quarter of 2012 and a decrease of 37.3% from $35.1 million for the fourth quarter of 2012.
GAAP gross profit margin was 26.8% for the first quarter of 2013, compared to 35.9% for the first quarter of 2012 and 32.2% for the fourth quarter of 2012. GAAP diluted loss per share was $0.54 for the first quarter of 2013, compared to $0.23 for the first quarter of 2012 and $0.50 for the fourth quarter of 2012.
Non-GAAP gross profit margin was 27.7% for the first quarter of 2013, compared to 36.4% for the first quarter of 2012 and 32.8% for the fourth quarter of 2012. Non-GAAP diluted loss per share was $0.41 for the first quarter of 2013, compared to $0.17 for the first quarter of 2012 and $0.35 for the fourth quarter of 2012.
Business Outlook
"Our results were in-line with the guidance that we provided for the first quarter of 2013 as we continue to work towards the objective of diversifying our market presence and expanding our customer base through our new go-to-market strategy," said Mark Moshayedi, CEO and president.
Go-to-market strategy for now and the long-term
"Based on the evolving dynamics of our industry, we have implemented a new go-to-market strategy. Focusing our efforts on selling SSDs as a component to a limited set of OEM customers in a market that has attracted much larger and more vertically integrated competitors has created challenges for us. In response to these changing dynamics, we are making significant investments in the people, tools and resources necessary to transition from an OEM-centric model to a more-balanced and diversified sales model. One of our high priority initiatives is to become more recognized and valued to end-users. To that end, we have re-branded the company, launched a global channel program and have hired enterprise sales and marketing personnel with expertise in systems and applications. As we continue to execute our plan, our target is to achieve a sales mix by year-end with about half of our revenue coming from traditional OEM customers and the other half coming from non-OEM customers, including global channel partners and direct enterprise customers. Longer-term, our goal is to have our customer base as widely distributed as possible."
Taking advantage of changes in market dynamics
Jeff Janukowicz, research director, SSD and enabling technologies at IDC expects that "by 2016, just under half of all enterprise storage capacity shipped will be through non-system OEM channels, including shipments directly to hyperscale cloud datacenters, ODMs, and specialized system integrators."
"Our model of targeting end-customers is right in alignment with this trend," continued Moshayedi. "IT managers have become more sophisticated and the problems of managing their traditional storage architectures more acute. As a result, companies are choosing to tailor their datacenters to be better optimized for their applications. In these instances, pre-configured solutions rarely match the customers’ needs. The capabilities of our enterprise sales team allow us to deliver value to customers through a solutions-based approach. The combination of systems, applications and SSD expertise that we deliver to the customer gives us a unique advantage in the marketplace. But more importantly, it allows us to solve our customers’ most critical problems with our solutions."
Expectation for the second quarter of 2013:
- Revenue to range from $23 million to $26 million
- Non-GAAP diluted loss per share to range from $0.41 to $0.43
Comments
Abstracts the earnings call transcript:
Mark Moshayedi, president and CEO:
"We did have one greater than 10% customer (an OEM) in the quarter, which will be out in the quarter, which should be released here momentarily.
"I can just give you general that the type of environment you are in there is a banking establishment that we are going after with their IT infrastructure that could be using about $20,000 of our drives. In that just one application alone, we've got a very large telecommunication company that has already committed to the products and they will be using 20,000 to 40,000 drives over the next 12 to 18 months and each one of these opportunities are $10 million, $20 million opportunities.
"The non-OEM portion for Q1 was 22.7%."
Raymond Cook, CFO:
"Net revenue by major product categories was as follows: flash related products accounted for $20.9 million or approximately 95% of total revenue; DRAM-related products accounted for $518,000 or 2% of total revenue; and service and other revenue accounted for $608,000 or approximately 3% of our total revenue.
"The flash-related revenue was comprised of ZeusIOPS of $13.9 million; MACH products of $2.7 million and embedded SSDs and other flash products of $4.3 million. International sales comprised 39.4% of our total revenue for the first quarter of 2013.
"The decline in gross profit margin is primarily attributable to an increase in fixed production overhead and a labor cost as a percentage of total revenue and the decrease in the average selling price, certain SSD products, which was partially offset by a decrease in flash component costs.
"Cash and cash equivalents decreased $25.3 million from Q4 of 2012 to $132.9 million. The composition of the cash decrease for the quarter was comprised of $15.2 million utilized to pay the company’s portion of the Federal Class Action Settlement, $8.7 million utilized for operations and $1.5 million for capital expenditures."
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