Feeds

Big Blue stalking STEC?

Rumours drive up SSD maker's share price

Top three mobile application threats

Comment: The share price of EMC's favoured SSD supplier, STEC has grown almost 60 per cent since the beginning of the year, yet law suits are amassing and its competitive position has weakened. The rumour is that IBM interest in buying STEC is pushing its share price up.

In September last year STEC's share price peaked at $41.84. It was riding high and its management had made some significant share sales. Then it announced results that were solid enough, but less than stellar, and said EMC had effectively over-ordered product and STEC wouldn't ship as much product as it had previously said.

The shares tanked, dropping to $21.32 by the end of October and then precipitously to $13.13 in early November. This reversal in investor sentiment was fuelled by a strengthening realisation that STEC's monopoly in Fibre Channel interface SSDs, the ones EMC favoured, would not last forever and that server-located SSDs with PCIe interfaces were going to become popular. This was helped by energetic marketing and PR from Fusion-io, a PCIe interface SSD supplier.

Strengthening this concern was the entry of Seagate into the enterprise SSD space, the news that Micron and Intel had intentions in that market, the entry of SandForce and Pliant with strong controller offerings, and thoughts that Hitachi GST could produce a Fibre Channel interface SSD with Intel's help. SAS interface SSDs were also thought to be possible substitutes for Fibre Channel ones, especially with a 6Gbit/s SAS interface.

So STEC wasn't coining dollars as fast it had hoped, its effective monopoly faced sustained assault, and EMC wasn't taking as much product, yet its directors had sold shares as they rose to their peak. Shareholders, especially ones who had bought as STEC was ramping up to its $41.84 peak were furious. Law firms sniffed out class action possibilities - seven or more of these are now underway, claiming STEC directors effectively duped shareholders.

STEC share price history

STEC's recent share price history from Google Finance.

Shares reached a low point of $11.44 on December 7, 73 per cent down on their peak. Since then nothing in STC's strategic situation has changed. No new design wins have been announced, although Fujitsu plumped for STEC on December 1 just before the bottoming out of the share price. No new product has been revealed, and no resumption of OEM order shipment growth rates have been announced; yet the shares have risen to the $19.58 mark, a 71 per cent rise. It seems a bit more substantial than a mere bounce after reaching the bottom.

The speculation and rumour is that IBM is interested in buying STEC. The logic seems pretty obvious with IBM getting control of the leading enterprise flash drive manufacturer, whose NAND product it is using in its SAN Volume Controller and disk drive arrays, and against a background of increasing SSD use in servers.

The big blue beast at Armonk has not spoken so this is all speculation, perhaps partly driven by burnt shareholders wistfully looking for a way to recoup their losses. Without the IBM interest the shares would appear to be over-valued, but I'm no investment analyst. ®

High performance access to file storage

More from The Register

next story
This time it's 'Personal': new Office 365 sub covers just two devices
Redmond also brings Office into Google's back yard
Kingston DataTraveler MicroDuo: Turn your phone into a 72GB beast
USB-usiness in the front, micro-USB party in the back
Dropbox defends fantastically badly timed Condoleezza Rice appointment
'Nothing is going to change with Dr. Rice's appointment,' file sharer promises
Inside the Hekaton: SQL Server 2014's database engine deconstructed
Nadella's database sqares the circle of cheap memory vs speed
BOFH: Oh DO tell us what you think. *CLICK*
$%%&amp Oh dear, we've been cut *CLICK* Well hello *CLICK* You're breaking up...
Just what could be inside Dropbox's new 'Home For Life'?
Biz apps, messaging, photos, email, more storage – sorry, did you think there would be cake?
AMD's 'Seattle' 64-bit ARM server chips now sampling, set to launch in late 2014
But they won't appear in SeaMicro Fabric Compute Systems anytime soon
Amazon reveals its Google-killing 'R3' server instances
A mega-memory instance that never forgets
prev story

Whitepapers

Top three mobile application threats
Learn about three of the top mobile application security threats facing businesses today and recommendations on how to mitigate the risk.
Combat fraud and increase customer satisfaction
Based on their experience using HP ArcSight Enterprise Security Manager for IT security operations, Finansbank moved to HP ArcSight ESM for fraud management.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
SANS - Survey on application security programs
In this whitepaper learn about the state of application security programs and practices of 488 surveyed respondents, and discover how mature and effective these programs are.