) first-quarter 2013 adjusted loss per share of 48 cents was
narrower than the Zacks Consensus Estimate of 50 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 however significantly wider than a
loss of 22 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 first quarter was $22.0 million, down 56.3%
on a year-over-year basis. The quarter's result missed the Zacks
Consensus Estimate of $28.0 million and was within the company's
guided range. The sales decline was due to market share loss.
Reported gross margin in the quarter was 26.8%, down from 35.9%
in the year-ago quarter. Higher percentage of fixed production
overheads 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 (115.4%) versus (27.5%) in the year-ago
quarter. The company's total operating expenses decreased 2.1% on
a year-over-year basis. Lower operating expenses were mainly due
to a 21.4% and 1.5% year-over-year decline in research &
development and selling & marketing expenses, respectively.
This was partially offset by a 31.3% increase in general &
Net loss on a GAAP basis was $25.5 million or 54 cents per share
compared with a net loss of $10.7 million or 23 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 first quarter was
$22.3 million or 48 cents per share versus $10.3 million or 22
cents loss per share in the year-ago quarter.
Balance Sheet & Cash Flow
Cash and cash equivalents were $132.9 million versus $158.2
million in the previous quarter. Inventories were at $42.1
million compared with $41.8 million in the prior quarter.
Receivables were $7.3 million versus $13.5 million in the prior
quarter. Cash from operating activities was $8.7 million, down
from $21.3 million in the prior quarter. Capital expenditure was
$1.5 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. 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 second quarter of 2013, management expects revenues in
the range of $23.0-$26.0 million. Non-GAAP loss per share is
expected between 41 cents and 43 cents.
STEC's first-quarter results were disappointing as both the top
and bottom lines were significantly down from the year-ago
quarter. The company suffered the sixth consecutive quarter of
loss. However, the reported loss per share was a tad better than
the Zacks Consensus Estimate. The second-quarter guidance
announced by the company is modest as management believes that
the diversified marketing strategy will take some time to pay
Also, intense competitive pressure from
Micron Technology Inc.
OCZ Technology Group
) is a concern.
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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