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designer/manufacturer,
will release its quarterly earnings results on 4/27/04. I expect STEC
to post strong results which could sent it above $6 in a hurry. STEC
is gradually recovering from a 20% loss suffered recently after peer
SNDK tanked following its latest earnings report. SNDK lost ground
despite beating analysts revenue/income estimates because it warned
that flash-memory margins might get tighter.

This is the typical "guilty-by-association" syndrome. However, the
comparison with SNDK is totally unfair because: 1) SNDK was way
overvalued at the time of its earnings release with a P/S 3 times
higher than STEC; 2) The expectations for SNDK were too high whereas
the expectations for STEC's earnings are already too low; 3) flash
memory is a fraction of STEC's revenue since more and more of its
revenue and income is being derived from its DRAM and from its
stacking memory tecnologies.

All recent reports agree that DRAM prices are going up and will
continue to do so and so the margins derived from it. In fact, take a
look at RMTR which is a FRAM memory producer, it was Nasdaq's biggest
winner on Friday.

I am confident that STEC will deliver better-than expected results
and the stock will go up as it should. Ironically the shorts that
pressured the stock to lose 20% of its value after SNDK's results,
will help the stock go back up because they will have to cover.

The Street isued an article this week highlighting STEC as a stock
that might be near a breakout (scroll down on the page below):

http://www.thestreet.com/p/rmoney/danfitzp...10154695_2.html

MORE on STEC

STEC is a fast-growing profitable company, currently trading at a
major discount compared to its peers. STEC has $76.4 Million in cash
and cash equivalents... and NO long-term debt. The current market cap
is only $260 million. Insiders own over 50% of the 48 million O/S
shares.

STEC recently posted a profit on 19% Revenue Growth for 4Q2003
compared to 4Q 2002. Revenue growth in FY 2003 was 36% compared to
2002.

STEC's current guidance is for full-year 2004 revenues to increase by
25 % to 35 % from FY 2003 revenues of $221.8 million.... or about
$280 to 304 million in revenues for 2004.

The company expects that gross margins will increase from 2 to 4 % in
the second half of 2004 primarily through efficiencies gained in its
flash memory card manufacturing logistics.

Higher revenues and higher margins will most likely push net income
in Q3 and Q4 2004 to $0.05/share and above.

The company has guided for revenues ranging from $59 to $61 million
for Q1 2004.its seasonally weakest quarter. STEC will release its 1Q
earnings report this month.

OUTLOOK....

I expect the price of STEC to continue its upwards movement into
1Q2004 earnings release this month and beyond because for several
reasons:

1) Revenues of about $60 million for 1Q 2004 (per guidance) will be
about 33% higher than the $40 million posted in 1Q 2003.

2) Net income will likely be slightly positive compared to a loss of
$1.6 million last year aided in part by the upswing in DRAM prices.

3) Guidance for 2Q and the rest of 2004 will be terrific because the
CEO already said that he expects revenues and margins to start
ramping up during 2Q 2004.

4) 2nd half 2004 margings are expexted to increase because of higher
DRAM and stacked-memory memory card prices and improvements in STEC's
flash-card manufacturing logistics as discussed during the last CC.

5) More than half a million short shares that will need to cover.
STECs short position has increased substantially lately and is
partially responsible for the drop in PPS. Ironically, this will
accelerate price appreciation as shorts cover.

STEC designs, manufactures and markets custom and open-standard
memory and storage products based on Flash memory and DRAM
technologies. It also manufactures connectivity products that connect
memory cards and hard drive upgrade kits to personal computers (PCs).

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