STEC: Fiscal 4Q07 Financial Results

STEC, Inc.
announced the company’s financial results for the fourth quarter
and full-year ended December 31, 2007.

Revenue for the fourth quarter of 2007 was $53.0 million, a
decrease of 28.7% from $74.3 million for the fourth quarter of 2006,
and an increase of 18.6% from $44.7 million for the third quarter of
2007.

Non-GAAP gross profit margin was 31.7% for the fourth quarter of
2007, compared to 33.9% for the fourth quarter of 2006, and 31.1% for
the third quarter of 2007. Non-GAAP diluted earnings per share was
$0.07 for the fourth quarter of 2007, compared to $0.19 for the fourth
quarter of 2006, and $0.05 for the third quarter of 2007. GAAP results
in the fourth quarter of 2007 included start-up costs related to the
Company’s Malaysia facility, Solid State Drive (SSD) product
development expense, global tax restructuring costs, first-year
implementation costs related to Sarbanes-Oxley Act Section 404,
Consumer Division sale-dispute arbitration fees, employee stock
compensation expense and the short-term impact of the implementation of
the global tax restructuring on the Company’s effective tax rate.
Non-GAAP results are explained and reconciled to GAAP results in tables
included in this release.

GAAP gross profit margin was 30.0% for the fourth quarter of 2007,
compared to 33.9% for the fourth quarter of 2006, and 29.0% for the
third quarter of 2007. GAAP diluted earnings per share from continuing
operations was $0.03 for the fourth quarter of 2007, compared to $0.19
for the fourth quarter of 2006, and $0.01 for the third quarter of
2007.

GAAP full-year 2007 revenue was $188.7 million, a decrease of 12.6%
from $215.8 million for 2006. GAAP gross profit margin was 30.2% for
2007, compared to 31.7% for 2006. GAAP full-year 2007 diluted earnings
per share from continuing operations was $0.11, compared to full-year
2006 diluted earnings per share from continuing operations of $0.45.

During the fourth quarter of 2007, the Company repurchased 335,847
shares of common stock under its previously announced stock repurchase
program at an average price, including commissions, of $7.48. The
Company repurchased 1,669,208 shares during the first quarter of 2008
to date. Since the inception of the stock repurchase program in July
2006 through February 29, 2008, the Company has repurchased an
aggregate of 2,005,055 shares of common stock at an average price,
including commissions, of $7.74 per share.

Business Outlook
"We believe that we are the leading-technology company providing
Solid State Drive solutions (SSD) to Original Equipment Manufacturers
(OEMs) in three major markets," said Manouch Moshayedi, STEC’s chief
executive officer. "We believe this position of leadership coupled with
our just-completed Malaysia production and engineering facility, and
the implementation of our global tax restructuring has placed STEC in
the most competitive and exciting position since the company was
founded more than 18 years ago."

"At this time last year, I shared my enthusiasm for our then
newly-developed ZeusIOPS line of SSDs targeted to the
Enterprise-Storage Market. We set a hopeful, early-stage revenue goal
of $5 million to $10 million for 2007. We not only surpassed that goal,
but more importantly announced in early 2008 the adoption of our
ZeusIOPS line of SSDs by one of the largest Enterprise-Storage
manufacturers, for integration into their high-performance systems."

"In November of 2007 we introduced our Mach8/IOPS line of SSDs
giving Enterprise-Server system providers increased performance while
decreasing their customers’ power consumption and total cost of
ownership. The Mach8/IOPS will enable our Enterprise-Server OEM
customers to achieve high read and write IOPS performance at a
competitive cost. Several of the leading Enterprise-Server OEMs are
currently testing our Mach8/IOPS and we are very encouraged by the
results to date. We expect sampling and testing for Mach8/IOPS to
continue for the next two to three quarters and are hopeful to begin
volume production during future quarters."

"In December of 2007 we introduced our Mach8 line of SSDs which we
plan to sell directly to laptop OEM customers. With the cost of SSDs
still a prohibitive factor when used in laptops, we became the first
company to introduce an SSD using significantly lower-priced —
MLC-based — NAND Flash chips. The introduction of our Mach8 with MLC
stands to significantly reduce the cost of SSDs for laptops. We are
encouraged by the positive initial feedback from many of the leading
OEMs who are sampling and testing our Mach8 with MLC. We are also
hopeful that we will begin volume production with this product during
future quarters."

Malaysia Facility
"As forecasted, we moved into our Penang facility in early January
of this year. Our new Malaysian facility is now operational and is
expected to ramp up to meaningful-production levels by the end of the
second quarter of 2008. We have already achieved ISO certification and
successfully completed several significant customer audits. We expect
our investment in this new facility to help reduce average production
and administrative costs, improve access to growing markets in Asia,
improve supply-chain efficiency and significantly lower our overall
long-term effective corporate tax rate."

Guidance
"We currently expect first quarter of 2008 revenue to range from $45
million to $47 million with diluted non-GAAP earnings per share to
range from $0.02 to $0.03. We are excited about our future in the
ever-expanding Enterprise-SSD markets, the opening of our Malaysia
facility, the implementation of our long-term global tax restructuring
and what execution of these initiatives mean to STEC’s look to the
future."

STEC, Inc.