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Stec shares tumble on weak 4Q guidance

NEW YORK (AP) -- Shares of Stec Inc. fell to their lowest price in nearly four years Wednesday after the data storage device maker announced third-quarter results that were in line with Wall Street predictions, but a disappointing guidance for the current quarter.

THE SPARK: On Tuesday Stec said it posted a third-quarter loss of $19.8 million, or 42 cents per share, compared with a profit of $4.8 million, or 9 cents per share, in the same quarter last year. Excluding one-time items, the company's adjusted loss was 24 cents per share.

Revenue dropped 42 percent to $42.1 million.

The results were better than Wall Street predicted. Analysts, on average, expected a loss of 28 cents per share on $40.7 million in revenue, according to FactSet.

The Santa Ana, Calif., company expects to post an adjusted fourth-quarter loss of 31 to 35 cents per share on $36 million to $40 million in revenue. Analysts expected a loss of 21 cents per share on $44.9 million in revenue.

THE BIG PICTURE: Stec, which has traditionally sold its products to equipment manufacturers, said it focused on broadening its customer base during the third quarter. While those investments appear to be paying off, the company cautioned that the transformation of its customer base will take time.

THE ANALYSIS: The weak outlook prompted Lazard Capital markets analyst Edward Parker to cut his rating for the company to "Neutral" from "Buy." Parker said that while the company's technology has value, he needs to see more signs that the company's products are being more broadly accepted by customers.

THE SHARES: Down $1.19, or 21 percent, to $4.45 in Wednesday afternoon trading, after dropping as low as $4.25 earlier in the session, under its previous 52-week low of $5.53, for its lowest price since late 2008.