Western Digital To Acquire sTec, Beef Up HGST SSD, Flash Storage Business


Aaron Rakers, an analyst with Stifel Nicolaus Equity Research, wrote in a Thursday research note that the acquisition is more of a technology-focused move because of sTec's 55 issued and 78 pending patents, and as part of a Western Digital strategy to strengthen its enterprise storage business.

sTec has been struggling to recover sales, which have been falling for a couple of years, with several new strategies.

Earlier this month, sTec introduced its first all-SSD storage appliance, the sTec s3000, based on its SSD technology and the Microsoft Windows Storage Server 2012 operating system.

sTec in April also signaled a shift to the channel and away from its near-total dependence on OEM business as a way to increase its business.

The moves come in the way of several disappointing financial quarters for the company.

sTec in May reported financial results for the first fiscal quarter 2013 to be $22.0 million, down 56.3 percent from the $50.4 million it reported for the first quarter of 2012. The company lost 54 cents per share in the first quarter of 2013, compared to 23 cents for the first quarter of 2012 on GAAP basis.

For all of 2012, sTec in February reported revenue of $168.3 million, a decrease of 45.4 percent from $308.1 million for full-year 2011. On a GAAP basis, the company reported a loss-per-share of $2.22 for all of 2012, compared to a full-year 2011 earnings per share loss of 50 cents.

PUBLISHED JUNE 24, 2013