Feeds

Fallen flash flogger sTec says direct sales will save its bacon

Two years of plummeting revenue and a dim light at end of tunnel

High performance access to file storage

Flash disk maker sTec isn't looking healthy. Its revenues have declined by over a third from the last quarter and net losses exceed revenues for this quarter - as they have done for the last 18 months.

Revenues from storage array manufacturers are falling away faster than the company's alternative revenue-generating efforts are growing and sTec's finances are floating in a sea of red ink, as its latest quarterly results show. It might, just might, have bottomed out, though.

sTec, the re-branded STEC, announced its calendar 2013 first quarter's revenues were $22m, less than half of the $50.4m reported a year ago and 37 per cent less than the last three months of 2012.

Profits? Nope. sTec made a net loss (greater than its revenue) of no less than $25.5m; the second time sTec has done this, but it's not an achievement to savour.

sTec results q1 fy2013

Down but not quite out ... sTec results for Q1 financial year 2013

The finger of blame was pointed by CEO Mark Moshayedi at his company's array-building partners - the original equipment manufacturers (OEMs) - during an earnings call. The chief exec said sTec was transitioning to a 50:50 OEM:non-OEM sales model by bulking up its direct sales force.

The OEM solid-state drive (SSD) market, he said, "has attracted much larger, more vertically integrated competitors and have become increasingly more challenging". sTec is in "transition from an OEM-centric model to a more balanced and diversified sales model. The high priority growth of this process is to become a more recognised brand to the enterprise end user customers", the boss added.

He didn't break down the current proportion of OEM sales to non-OEM sales but, given the fantastic rate of revenue decline as OEM sales fall, The Register suspects it's around 80 per cent OEM.

He talked about making sTec more accessible to end-users: "We’ve re-branded the company, launched a global channel program, [and] hired enterprise sales and marketing personnel with expertise in systems and applications."

Non-OEM customers will be a mix of channel partners and direct enterprise customers, it seems. There are no immediate product refreshes which could lift revenues; it's all down to the new sales force bringing in sales. It's that simple. Can sTec do it and reverse the revenue drop?

Next quarter revenues are projected to rise slightly, to between $23m and $26m but sTec will still make a loss.

Can Moshayedi build up non-OEM sales fast enough at sTec to compensate for the OEM revenue declines? Can he get sTec revenues up to the $65m to $75m break-even point? We'll find out in three months' time. ®

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
European Court of Justice rips up Data Retention Directive
Rules 'interfering' measure to be 'invalid'
Dropbox defends fantastically badly timed Condoleezza Rice appointment
'Nothing is going to change with Dr. Rice's appointment,' file sharer promises
Bored with trading oil and gold? Why not flog some CLOUD servers?
Chicago Mercantile Exchange plans cloud spot exchange
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?
IT bods: How long does it take YOU to train up on new tech?
I'll leave my arrays to do the hard work, if you don't mind
Amazon reveals its Google-killing 'R3' server instances
A mega-memory instance that never forgets
prev story

Whitepapers

Securing web applications made simple and scalable
In this whitepaper learn how automated security testing can provide a simple and scalable way to protect your web applications.
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.
HP ArcSight ESM solution helps Finansbank
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.
Mobile application security study
Download this report to see the alarming realities regarding the sheer number of applications vulnerable to attack, as well as the most common and easily addressable vulnerability errors.