STEC Seeing A Free Fall After Takeover Rumor Falls Flat

Shares of STEC Inc (NASDAQ: STEC), which is mired in lawsuits and facing a weakening competitive position, have been on an uptrend since the beginning of the year on rumors of a possible takeover by IBM (NYSE: IBM).

STEC’s shares lost their steam yesterday after Avian Securities analyst Matt Bryson warned that the rumors of the world’s biggest computer-services company courting STEC were "misguided." The shares of the favored SSD supplier of EMC (NYSE: EMC) had climbed by roughly 60% since the start of the month when Bryson called off the hoax.

After having peaked at $41.84 in September, STEC's share price has been slipping. The first hit came when STEC announced less than impressive results, blaming EMC for over-ordering products that could not be shipped. With investors realizing that the company’s monopoly in Fibre Channel interface SSDs was short-lived, STEC continued to suffer in the stock market. By December, STEC’s shares had touched a low of $11.44.

In his note, Bryson cautioned that the sales momentum at EMC remains unchanged and the inventory overhang will continue.

STEC’s shares have lost 8.64% to $16.80.

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