STEC Inc., which is a Santa Ana-based company, reported a major fall in share prices on Wednesday. The company develops flash memorial drives that are used by corporate and industries. On Tuesday, STEC had said that it might be possible that the orders from its major customer, Hopkinton, which is a Mass-based EMC Corp., is expected to lower down and this resulted in the lower value of the shares at $700 million. This marks a 40% reduction from its previous share value.

The company announced a very disappointing outlook for the fourth-quarter that made investors sell large amounts of their stocks on Tuesday. On Wednesday, this got worse. The expected adjusted profits for the fourth-quarter were reported at $25 million to $26 million, whereas the analysts were expecting adjusted profits of at least $26 million.

Similarly sales were also reported down from the analyst’s expectations of $106 million at $101 million to $103 million. This has raised doubts in the minds of both the analysts and the investors of the prospective growth of the company.

The drives made by STEC are used to store data and are mostly found in servers that are used by banks, governments, corporate, etc. For the previous year, the company had a full hold of the market for these drives but now companies like Intel Corp., Kingston Technology Co., Seagate Technology, Western Digital Corp. and similar other companies are offering tough competition to STEC. Since the beginning of the year to mid-September the shares of STEC were up by around 800%. But after that the share value has lowered by 45% reducing the complete gain at only 200%.

This entry was posted on Friday, November 6th, 2009 at 1:39 pm and is filed under Venture Capital News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.