Feeds

Big Blue stalking STEC?

Rumours drive up SSD maker's share price

Security for virtualized datacentres

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. ®

Providing a secure and efficient Helpdesk

More from The Register

next story
It's Big, it's Blue... it's simply FABLESS! IBM's chip-free future
Or why the reversal of globalisation ain't gonna 'appen
IBM storage revenues sink: 'We are disappointed,' says CEO
Time to put the storage biz up for sale?
'Hmm, why CAN'T I run a water pipe through that rack of media servers?'
Leaving Las Vegas for Armenia kludging and Dubai dune bashing
Microsoft and Dell’s cloud in a box: Instant Azure for the data centre
A less painful way to run Microsoft’s private cloud
Facebook slurps 'paste sites' for STOLEN passwords, sprinkles on hash and salt
Zuck's ad empire DOESN'T see details in plain text. Phew!
Windows 10: Forget Cloudobile, put Security and Privacy First
But - dammit - It would be insane to say 'don't collect, because NSA'
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Why and how to choose the right cloud vendor
The benefits of cloud-based storage in your processes. Eliminate onsite, disk-based backup and archiving in favor of cloud-based data protection.
Three 1TB solid state scorchers up for grabs
Big SSDs can be expensive but think big and think free because you could be the lucky winner of one of three 1TB Samsung SSD 840 EVO drives that we’re giving away worth over £300 apiece.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.