Monthly Archives: August 2009

STEC news

STEC’s 6Gb SAS ZeusIOPS SSDs at Flash Memory Summit (FMS) are now sampling into high-performance Enterprise storage and server systems. The advancement is expected to generate additional momentum for the successful STEC’s SAS SSD series which has already been widely adopted with the 3Gb SAS ZeusIOPS. The 6Gb SAS ZeusIOPS SSD will deliver an unprecedented 80,000 IOPS Random Read, 40,000 IOPS Random Write with transfer speeds of 550MB/s read and 300MB/s write. Available in both 2.5″ and 3.5″ form factors and supporting SLC and MLC Flash, this next generation 6GB SAS ZeusIOPS SSD is expected to be in full production by end of Q4.

Fulfilling the demand for high-performance and high-reliability SSDs, STEC is once again elevating the performance metrics by increasing Read/Write performance by 3x and lowering the maximum latency to 10x over its 2nd generation ZeusIOPS.

“STEC was among the first to introduce SAS-based SSDs into the Enterprise Storage market and today leads it into the next generation by advancing its performance and reliability,” said Manouch Moshayedi, Chairman and Chief Executive Officer of STEC. “Our goal is to keenly follow the current and future needs of our customers and continue to deliver the latest in Enterprise SSD technologies that will allow for the maximum performance of SSDs in their systems. Having anticipated the acceleration of SAS adoption among our major customers, the introduction of our 6GB SAS interface ZeusIOPS is yet another example of this as we have designed our next-generation SAS ZeusIOPS SSD to meet the higher performance needs of the market.”

STEC will have a conference tomorrow introducing their new developments. Multiple announcements today:

1. STEC Delivers Industry’s First Enterprise Class 6Gb Serial Attached SCSI (SAS) Solid State Drive (SSD)

2. STEC Launches Next Generation Enterprise Class 4Gb Fibre Channel (FC) Solid State Drive (SSD)

3. STEC First to Deliver MLC-Based Enterprise-Class Solid State Drives (SSDs), Enabling Broader Enterprise SSD Market Adoption

4. STEC Integrates MACH8IOPS SSD Into IBM’s System x Servers

A lot of information disseminated in one day. A lot positive things going on for STEC.

Today’s market action

The market finally went down today after strength and recovery would insist on being a green day based on the last few weeks. Cisco earnings were reported after the market close today and they beat estimates but the future outlook was tepid. Cisco was trading lower after hours to reflect the less than warm fuzzy feeling. Private equity firm Fortress managed to impress with their earnings report this morning and I look forward to reviewing Blackstone’s (BX) results tomorrow.

STEC Inc conf call summary

Co says cash, cash equivalents, and short-term investments increased to $93.7 mln as of June 30th, 2009, compared to 62.7 mln as of March 31st, 2009. In addition, our $35 mln unsecured line of credit with Wachovia bank remains in place with no balance outstanding for the quarter ended June 30, 2009… Co notes that inventory was pretty low at the end of Q2 and believes inventory will be built to this quarter and is comfortable with the 45-50 mln inventory level. On gross margins, on a go forward basis, co says its margins will remain in the 50-60% area and says that the co has no competition at this stage. In addition to that, the hard drive manufacturers in the enterprise area are still making upwards of 40% margin in that business. So we feel that even going forward, if we have competition in the area of enterprise, with moving to Malaysia, changing our — to ASICs, and also the capacity we’ve built in Malaysia and being able to build all of these — streamline all of the buildings of the SSTs, I think we will be able to maintain 50% margin. The breakdown between MACH8 and DRAM was ~$6.5-7 mln for MACH8, while Flash was ~$9.5 mln… In the cos guidance, STEC said of the second half supply contract of 120 mln, about 55 mln out of the 120 mln was built into the Q3 numbers. Also, other than the $95-97 mln to revs guidance noted in the press release, STEC also said its forecasting ~$67 mln for ZeusIOPS revs. Co says, “We are still forecasting very moderately going forward. Hopefully we can come to an agreement with the rest of the customers, once they start seeing a huge amount of sales on their part, and do a similar announcement on that side, but at this point we’re very moderate in our approach in terms of what we are predicting for Zeus IOPS.”

STEC Inc beats by $0.08, beats on revs; guides Q3 EPS above consensus, revs in-line

Reports Q2 (Jun) earnings of $0.42 per share, excluding non-recurring items, $0.08 better than the First Call consensus of $0.34; revenues rose 53.7% year/year to $86.4 mln vs the $83.3 mln consensus. Q2 gross margin was 50% vs 43.6% consensus. Co issues mixed guidance for Q3, sees EPS of $0.45-0.47, excluding non-recurring items, vs. $0.39 consensus; sees Q3 revs of $95-97 mln vs. $95.77 mln consensus.

STEC reports earnings tomorrow Aug 3

After thorough research, analysis, and speaking to industry experts on SSD drives and STEC’s market position, I firmly believe that STEC is poised to report strong earnings tomorrow. They currently have market dominance with an edge on the competition for at least a year. Of course beating analyst estimates does not necessarily equate to a higher stock price…. forward looking guidance holds more weight than what the company’s financial results were the previous 3 months. I like STEC going forward.

For disclosure purposes, I do hold STEC securities.