us stec ahead of the bell 110409
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Stec shares dive as 4th-quarter outlook disappoints and competition intensifies
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NEW YORK - Shares of Stec Inc. tumbled ahead of regular trading Wednesday after the company gave a weak outlook for the rest of the year and investors fretted about rising competition.
Shares of the company, which makes data storage devices such as solid state drives, toppled $7.10, or 31 percent, to $16.05 in premarket trading.
Stec reported a 20-fold increase in third-quarter profit late Tuesday, with revenue up by 54 percent to $98.3 million.
But the company's revenue forecast for the rest of the year fell short. It projected sales of $101 million to $103 million for the quarter ending in December. Analysts polled by Thomson Reuters were looking for $106 million, on average.
Oppenheimer & Co. analyst Gary Hsueh cut his rating on the company's shares to "Perform," from "Outperform" in a note to clients Wednesday, warning of increasing competition next year.
He said the company is having trouble developing new business. And inventory is high at one customer, EMC Corp., which could lead to a "sizable downtick" in sales during the first quarter of 2010, Hsueh said.
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