Originally Posted by USMC
What's the skinny on this? Looks like a possible rebound play.
In a nut shell, I think its the fear of competition and the delay in the order as written below. P/E at close was 50, now its around half that if it opens where its at.
* Q3 EPS $0.47 vs $0.02 yr ago
* Q3 rev up 50 pct
* Sees Q4 adj EPS $0.51-$0.53 vs est $0.52
* Shares down 33 pct
Nov 3 (Reuters) - Stec Inc (STEC.O) posted a higher third-quarter profit, helped partly by a rise in gross margins, but shares tumbled 33 percent as the company warned orders from a key customer could be at risk in the first quarter.
"One of our customers entered into a $120 million supply agreement with us for shipments covering the second half of 2009," Chief Executive Manouch Moshayedi said, adding the customer might carry inventory of one of its product into 2010, and potentially hurting first-quarter orders.
Stec, which makes flash memory storage products, also forecast fourth-quarter earnings of 51 cents to 53 cents a share, before items, on revenue of $101 million to $103 million.
Analysts on average were expecting 52 cents a share, excluding items, on revenue of $106 million, according to Thomson Reuters I/B/E/S.
For the third quarter, Stec earned $24.5 million, or 47 cents a share, compared with $1.2 million, or 2 cents a share, a year ago. Excluding items, it earned 50 cents a share.
Revenue grew 50 percent to $98.3 million.
Analysts were expecting earnings of 47 cents a share, before items, on revenue of $96.6 million.
Third-quarter gross margins rose to 49.7 percent from 32.1 percent a year ago.
The company counts hardware OEMs such as IBM Corp (IBM.N) and Hitachi (6501.T) among its larger customers.
Shares of the Santa Ana, California-based company fell 33 percent to $15.60 in trading after the bell. They closed at $23.15 Tuesday on Nasdaq. (Reporting by Manasi Phadke in Bangalore; Editing by Pradeep Kurup)