) reported second quarter 2012 adjusted loss per share of 36 cents,
wider than the Zacks Consensus Estimate of 32 cents loss per share.
The adjusted or non-GAAP loss per share excludes employee severance
fees, litigation costs and deferred tax valuation allowance, but
includes stock-based compensation expense. The quarter's earnings
dropped 294.0% from the year-ago level. The miss was due to higher
costs, lower pricing and market share loss.
MICRON TECH (MU): Free Stock Analysis Report
OCZ TECHNOLOGY (OCZ): Free Stock Analysis
SANDISK CORP (SNDK): Free Stock Analysis Report
STEC INC (STEC): Free Stock Analysis Report
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Total revenue for the second quarter was $40.7 million, down 50.6%
on a year-over-year basis. The lackluster performance was primarily
due to a 50% decline in Flash-based product sales. The sales
decline was due to market share loss.
Reported gross margin in the quarter was 36.6%, down from 44.7% in
the year-ago quarter. Higher percentage of fixed production
overhead and labor costs on revenue and competitive pricing pulled
down the gross margin. This was partially offset by favorable
Operating margin was (56.0%) versus 12.0% in the year-ago quarter.
The company's total operating expenses increased 39.8% on a
year-over-year basis. Higher operating expenses were mainly due to
68.4%, 34.5% and 13.7% year-over-year increases in general and
administrative expenses, research and development expenses, and
selling and marketing expenses, respectively.
Net loss on a GAAP basis was $49.6 million or $1.07 per diluted
share compared with net income of $9.7 million or 18 cents in the
After excluding non-recurring items associated with cost of sales
and operating expenses after taxes but including stock-based
compensation expense, adjusted net loss for the second quarter was
$16.6 million or 36 cents per diluted share. There were no such
one- time items recorded in the year-ago quarter.
Balance Sheet & Cash Flow
Cash and cash equivalents were $207.2 million versus $205.7 million
in the previous quarter. Inventories were at $34.6 million compared
with $37.5 million in the prior quarter. Receivables were $19.4
million versus $21.4 million in the prior quarter. Cash from
operating activities was $4.0 million, down from $26.2 million in
the prior quarter. Capital expenditure was $4.7 million compared
with $1.8 million in the prior quarter.
Earlier, STEC marketed its products through OEMS (original
equipment manufacturers). However, since the past few months, it
has been marketing its products directly to enterprises and
end-users. The management believes that the transition will likely
take place during the third quarter and expects solid contributions
from enterprise verticals. With this diversification strategy, the
company believes that customer concentration risks will be
For the third quarter, management expects revenue in the range of
$40.0-$142.0 million, Non-GAAP loss per share is expected between
31 cents and 27 cents.
The Zacks Consensus Estimates for third quarter and fiscal 2012 are
pegged at a loss of 27 cents and $1.00 per share, respectively.
STEC's second quarter loss per share was wider than the Zacks
Consensus Estimate. The third quarter guidance announced by the
company is disappointing, despite the encouraging and diversified
marketing strategy adopted by the company.
We are also bearish due to intense competitive pressures from
Micron Technology Inc.
OCZ Technology Group
Currently, STEC has a Zacks #4 Rank, implying a short-term Sell