) fourth-quarter 2012 adjusted loss per share of 42 cents was
wider than the Zacks Consensus Estimate of 39 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 loss per share was significantly wider than a loss of 7
cents per share incurred in the year-ago period. The
disappointing result was due to higher costs, lower pricing and
market share loss.
Total revenue for the fourth quarter was $35.1 million, down
39.6% on a year-over-year basis. The quarter's result missed the
Zacks Consensus Estimate of $38.0 million and the company's
guided range. The sales decline was due to market share loss.
Reported gross margin in the quarter was 32.2%, down from 41.1%
in the year-ago quarter. Higher percentage of fixed production
overhead and labor costs on revenues and competitive pricing
pulled down the gross margin. This was partially offset by
favorable flash-component costs.
Operating margin was (68.3%) versus (9.3%) in the year-ago
quarter. The company's total operating expenses increased 20.5%
on a year-over-year basis. Higher operating expenses were mainly
due to 49.2%, 17.8% and 6.5% year-over-year increases in general
and administrative, selling and marketing, and research and
development expenses, respectively.
Net loss on a GAAP basis was $23.2 million or 50 cents per share
compared with a net loss of $3.6 million or 8 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 fourth quarter
was $19.8 million or 42 cents per share versus $3.4 million or 7
cents loss per share in the year-ago quarter.
Balance Sheet & Cash Flow
Cash and cash equivalents were $158.2 million versus $186.2
million in the previous quarter. Inventories were at $41.8
million compared with $44.5 million in the prior quarter.
Receivables were $13.5 million versus $13.2 million in the prior
quarter. Cash from operating activities was $21.3 million, up
from $18.1 million in the prior quarter. Capital expenditure was
$1.8 million compared with $2.5 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. Management believes that the transition could lead to
solid contributions from enterprise verticals. With this
diversification strategy, the company believes that customer
concentration risks will be mitigated. Moreover, the company
expects the diversification procedure to start paying off from
For the first quarter 2013, management expects revenues in the
range of $21.0-$23.0 million. Non-GAAP loss per share is expected
between 40 cents and 41 cents.
Management also stated that the company has hired some
experienced personnel from the storage industry to boost its
sales and marketing efforts. This will provide support to revenue
growth, going forward.
STEC's fourth-quarter results were disappointing as both the top
and bottom lines missed the Zacks Consensus Estimates. Moreover,
it marked five straight quarters of loss for the company. The
first-quarter guidance announced by the company is disappointing
as management believes that the diversified marketing strategy
will take some time to pay off.
Also, intense competitive pressures from
Micron Technology Inc.
OCZ Technology Group
) are concerns.
Currently, STEC has a Zacks Rank #4 (Sell).
MICRON TECH (MU): Free Stock Analysis Report
OCZ TECHNOLOGY (OCZ): Free Stock Analysis
SANDISK CORP (SNDK): Free Stock Analysis
STEC INC (STEC): Free Stock Analysis Report
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