Barron's Thinks STEC (STEC) Could Eventually Be Acquired

Barron's wrote a bullish piece on STEC, Inc. (Nasdaq: STEC) and thinks that this company can thrive after being in the solid-state disk-drive business for approximately 20 years.

STEC's are made of flash memory-chips, similar to what's in Apple's (Nasdq: AAPL) iPod. This technology allows STEC's hard drives to be a lot faster than traditional hard-disk drives, and they also use less power.

STEC dominates the most expensive kind of drive, which it sells to EMC (NYSE: EMC) and other makers of storage equipment for large corporations. While companies like SanDisk (Nasdaq: SNDK) sell storage containing flash chips to consumers, STEC sells only to large storage-equipment makers.

This year sales for disk-drive makers are expected to fall by 15%, while shipments of flash drives like those STEC sells are expected to rise 227% between 2007 and 2012, according to research firm IDC.

STEC supplies nearly all the top makers of storage equipment, including EMC , Sun Microsystems (Nasdaq: JAVA) and deals with IBM (NYSE: IBM) and Hewlett-Packard (NYSE: HPQ) could be inked soon.

Industry analysts think STEC's disk-drive performance has about an 18-month lead on competitors. "I look at the design wins in the marketplace, and right now, this market is all theirs," says B. Riley analyst Mike Crawford.

STEC's co-founder and CEO, Manouch Moshayedi, actually says STEC's 30 flash-memory-drive patents, and 53 pending patents is its biggest advantage over the competition.

Barron's says with all of STEC's patents and client wins, "STEC is far more likely to be bought out than pushed out of this market."

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