Stec soars as analysts react favorably to products

NEW YORK—Shares of chip maker Stec Inc. soared Thursday after the company met with analysts to discuss its solid state drive technology, a relatively new competitor to conventional hard disk computer drives.

Lehman Brothers analyst Tim Luke was impressed with the energy-saving benefits of the technology, as the company said it will cut disk drive energy usage by more than 50 percent. Stec also told analysts its disk drives are more durable than hard disk drives.

"In our view, the biggest difference between solid state and 'traditional' hard disk drives is that solid state drives contain no high-precision moving parts that can be damaged or wear out," Luke said, noting that conventional hard disk drives use a head that moves across the surface of the disc, rather like a record player's needle moves on a spinning vinyl LP.

He also said a solid state drive increases computer battery life by about 10 percent. This translates to around 10 to 20 additional minutes of run time from a standard notebook computer battery.

Deutsche Bank analyst Bob Gujavarty said Stec will benefit from the growing popularity but said demand will ramp slower than the company expects and competition is likely to intensify in the second half of 2008.

He reiterated his "Hold" rating, saying the stock is fairly valued.

Stec shares rose $1.11, or 9.4 percent, to $12.95. They have traded in the last year between $5.67 and $13.06.