WASHINGTON (dpa-AFX) - Shares of Stec, Inc. (STEC) plunged 36 percent in extended trading on Tuesday after the data storage company provided earnings and revenue guidance for the fourth quarter, significantly below analysts' expectations. The company also reported a profit for the third quarter that plunged from last year, on sharply higher operating expenses and lower gross margins, but topped Street view by four cents.
'Despite the challenging environment, we were able to beat our guidance for the third quarter and continue to believe that there is a major role and opportunity for our company in the growing data storage industry,' Chairman and CEO Manouch Moshayedi said in a statement.
Santa Ana, California-based Stec, which designs flash solid-state drives for servers, reported net income of $4.84 million or $0.09 per share for the third quarter, sharply lower than $13.62 million or $0.26 per share in the prior-year quarter.
Excluding items, adjusted income from continuing operations for the quarter more than halved to $7.36 million or $0.14 per share from $16.32 million or $0.31 per share in the year-ago quarter.
On average, 13 analysts polled by Thomson Reuters expected earnings of $0.10 per share for the quarter. Analysts' estimates typically exclude special items.
Revenues for the quarter decreased 15.8 percent to $72.53 million from $86.07 million in the same quarter last year, and topped fourteen Wall Street analysts' consensus estimate of $70.71 million.
Operating margin for the quarter contracted 990 basis points to 7.6 percent from a year ago as gross margin decreased 60 basis points to 45.8 percent from last year, and sharply higher operating expenses.
Looking ahead to the fourth quarter, STEC expects adjusted results in a range of breakeven to a loss of $0.02 per share, on revenue projected between $55 million and $57 million.
Street is currently looking for fourth-quarter earnings of $0.11 on quarterly revenues of $72.55 million.
'Our product development and qualification efforts will continue unabated through this transitional period in order to renew the growth trajectory of business in the latter half of 2012,' Moshayedi added.
STEC closed Tuesday's regular trading session at $11.70, down $0.02 or 0.17% on a volume of 2.13 million shares. The stock plunged a further $2.20 or 18.80% in after-hours trading.
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