Stec: Fiscal 4Q11 Financial Results

(in US$ millions)	4Q10	4Q11	FY10	FY11
Revenues	93.9	58.1	280.1	308.1
*Growth*		-38%		*10%*
Net income (loss)	17.4	(3.6)	28.5	25.1

STEC, Inc. announced the company’s financial results for the fourth quarter and full-year ended December 31, 2011.

Revenue for the fourth quarter of 2011 was $58.1 million, a decrease of 38.1% from $93.9 million for the fourth quarter of 2010 and a decrease of 19.9% from $72.5 million for the third quarter of 2011.

GAAP gross profit margin was 41.1% for the fourth quarter of 2011, compared to 45.2% for the fourth quarter of 2010 and 45.8% for the third quarter of 2011. GAAP diluted loss per share from continuing operations was $0.08 for the fourth quarter of 2011, compared to GAAP diluted earnings per share from continuing operations of $0.34 for the fourth quarter of 2010 and $0.09 for the third quarter of 2011.

Non-GAAP gross profit margin was 41.5% for the fourth quarter of 2011, compared to 45.3% for the fourth quarter of 2010 and 46.0% for the third quarter of 2011. Non-GAAP diluted loss per share from continuing operations was $0.02 for the fourth quarter of 2011, compared to non-GAAP diluted earnings per share from continuing operations of $0.35 for the fourth quarter of 2010 and $0.14 for the third quarter of 2011.

Revenue for full-year 2011 was $308.1 million, an increase of 10.0% from $280.1 million for 2010. GAAP gross profit margin was 43.6% for 2011, compared to 43.4% for 2010. GAAP full-year 2011 diluted earnings per share from continuing operations was $0.50, compared to full-year 2010 diluted earnings per share from continuing operations of $0.56.

Non-GAAP gross profit margin was 43.8% for full-year 2011, compared to 43.6% for 2010. Non-GAAP diluted earnings per share from continuing operations was $0.70 for full-year 2011, compared to $0.69 for 2010.

A reconciliation of GAAP to non-GAAP results is provided in the tables included in this release.

Business Outlook
"As we reported last quarter, our business remains in a relatively stable pattern as we continue to qualify our new products with customers," said Manouch Moshayedi, STEC’s Chairman and Chief Executive Officer. "We are encouraged by the signs of the market growth for enterprise SSDs and by the specific feedback we are getting from our early customer engagements around our new products.

"The fourth generation of ZeusIOPS is the latest version of our flagship product that offers industry-leading performance and makes MLC Flash viable for the enterprise at significantly lower price points.

"Our MACH16 and PCIe SSDs have also been designed with key differentiators as we begin to compete more aggressively in the datacenter and server environments.

"All three of these product lines incorporate our proprietary CellCare and ASIC technologies and along with early versions of our software caching product EnhanceIO are now in qualification with customers.

"While we acknowledge that competitive challenges persist, we are confident in the robustness of our solutions and in our abilities to innovate to meet our customers’ needs. We are still anticipating that many of our customers will complete their qualification of our products by the end of the second quarter of 2012. However, until qualifications are completed, we cannot accurately project what the sell-through of these products will be."

STEC’s current expectation for the first quarter of 2012:

Revenue to range from $49 million to $51 million.
Diluted non-GAAP loss per share to range from $0.14 to $0.16.