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STEC Lowers Guidance for the Fourth Quarter of 2008

SANTA ANA, Calif., Dec. 15, 2008 (GLOBE NEWSWIRE) -- STEC, Inc. (Nasdaq:STEC) today announced that due to the cancellation of previously-anticipated orders, it is revising its revenue guidance for the fourth quarter of 2008 to approximately $55 million to $59 million from its earlier guidance ranging from $69 million to $72 million. This will negatively affect the Company's operating results including its previous Non-GAAP diluted Earnings Per Share guidance issued on November 10, 2008. The revenue revision is comprised of approximately $20 million of previously-forecasted orders for its legacy DRAM and CompactFlash card products by various customers. The Company expects that the cancelled orders will be partially offset by increased orders for its Solid-State Drive (SSD) products used in Ultra-Mobile Personal Computer applications.

Enterprise Business Continues to Ramp

In contrast to the Company's legacy DRAM and CompactFlash markets where multiple competitors exist who are experiencing similar setbacks, its emerging high-performance SSD business -- tailored to OEM customers in the Enterprise-Storage and Enterprise-Server markets -- continues to ramp up. Qualifications for its first-to-market, and still without rival, ZeusIOPS products have continued at an aggressive pace despite the economic slowdown and the Company expects to surpass the $50 million revenue goal that it had previously set for the ZeusIOPS product line for the full-year 2008. The Company expects revenue from sales of all of its SSD product lines to exceed $70 million for the full-year 2008. This will be an increase from $13 million in SSD revenue for the full-year 2007.

The Company added that qualification samples of the its recently-announced ZeusIOPS-SAS SSDs are now being shipped. Qualifications for the Company's Mach8/IOPS products -- ideal for the full spectrum of Enterprise-Server applications -- continue to progress.

Guidance

The Company currently believes that due to poor visibility in its lower-margin DRAM business and the severity of the current economic downturn, its revenue for the first quarter of 2009 is expected to range from $42 million to $50 million. The Company expects revenue for full-year 2009 to be under pressure and to range from $200 million to $240 million. However, the Company expects to counter-balance the challenges faced by its legacy product lines with significant growth -- in its ZeusIOPS-SAS SSDs, ZeusIOPS-Fiber Channel SSDs, and its Mach8/IOPS SSDs -- in 2009 which should result in an overall positive shift in product mix.

In addition, the Company is currently taking measures to reduce costs by $4 million to $8 million on an annual basis, centered primarily around its continued transition of significant operations to Malaysia. The Company expects to start realizing these savings beginning in the second quarter of 2009.

About STEC

STEC, Inc., with headquarters in Santa Ana, California and offices around the globe, offers the industry's broadest range of SSDs, each with distinct product architectures to achieve the unique requirements of specific applications, spanning storage systems, servers, ultra-mobile PCs and beyond. STEC's multi-tiered Enterprise SSD offering enables OEMs the ability to achieve significant performance improvements, power savings and improved total cost of ownership for Enterprise Systems.

For more information, visit the Company's web site at www.stec-inc.com.

The STEC, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=1079

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

This press release contains forward-looking statements that involve risks and uncertainties, including, but not limited to, statements concerning: revised revenue guidance for the fourth quarter of 2008; the negative impact to the Company's operating results, including its previous Non-GAAP diluted Earnings Per Share guidance; cancelled orders expected to be partially offset by increased orders for the Company's Solid-State Drive (SSD) products used in Ultra-Mobile Personal Computer applications; Company's emerging SSD business continuing to ramp up; qualification for ZeusIOPS products continuing at an aggressive pace; expectation to surpass the $50 million revenue goal for its ZeusIOPS product line for the full-year 2008; expectation for all SSD product line revenue to exceed $70 million for the full-year 2008; product qualifications for the Company's Mach8/IOPS continuing to progress; revenue guidance for first quarter and full-year 2009; expectation to counter-balance the challenges faced by the Company's legacy product lines with significant growth -- in its ZeusIOPS-SAS SSDs, ZeusIOPS-Fiber Channel SSDs, and its Mach8/IOPS SSDs -- in 2009 which should result in an overall positive product mix shift; cost reduction measures expected to reduce costs by $4 million to $8 million on an annual basis; and expectation to start realizing these savings beginning in the second quarter of 2009. Such forward-looking statements are based on current expectations and involve inherent risks and uncertainties, including factors that could delay, divert or change any of them, and could cause actual outcomes and results to differ materially from current expectations. Important factors which could cause actual results to differ materially from those expressed or implied in the forward-looking statements are detailed under "Risk Factors" in filings with the Securities and Exchange Commission made from time to time by the Company, including its Annual Report on Form 10-K, its quarterly reports on Form 10-Q, and its current reports on Form 8-K. Other factors that could cause our actual results to differ materially from those expressed or implied in the forward-looking statements include the following risks: changes in demand from certain customer segments; the cost of raw materials may fluctuate widely in the future; excess inventory held by our customers may reduce future demand for our products; the invalidation or circumvention of our patents and intellectual property; the unexpected cost of intellectual property litigation, including such litigation diverting the efforts of our technical and management personnel; results of litigation is inherently uncertain; risk that our products could be enjoined by court or that an adverse result in litigation could lead to our obligation to pay significant damages and/or obtain a license; design wins may not lead to revenues; unexpected cancellation or rescheduling of orders by our customers; we may not realize the expected benefits from our operations in Malaysia or from our global tax restructuring; unexpected increases in the cost associated with the operation of our new Malaysia facility; unexpected delays in the qualification process of our products with customers; our growth initiatives may not be successfully implemented; slower than expected expansion of our international business; we may not realize the anticipated benefits from any acquisitions of businesses, technologies, or assets we have acquired or may acquire in the future; excess availability of DRAM or Flash memory could reduce component pricing resulting in lower average selling prices and gross profit; DRAM or Flash memory supply may tighten requiring suppliers to place their customers, including us, on limited component allocation; interruptions or delays at the semiconductor manufacturing facilities that supply components to us; higher than expected operating expenses; new and changing technologies limiting the applications of our products; our inability to become more competitive in new and existing markets, our inability to maintain and increase market share, difficulty competing in sectors characterized by aggressive pricing and low margins; new customer and supplier relationships may not be implemented successfully; higher than anticipated capital equipment expenditures; adverse global economic and geo-political conditions, including acts of terror, business interruption due to earthquakes, hurricanes, pandemics, power outages or other natural disasters; and potential impact of high energy prices and other global events outside of our control which could adversely impact customer confidence and hence reduce demand for our products. The information contained in this press release is a statement of STEC's present intention, belief or expectation. STEC may change its intention, belief or expectation, at any time and without notice, based upon any changes in such factors, in STEC's assumptions or otherwise. STEC undertakes no obligation to release publicly any revisions to any forward-looking statements to reflect events or circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events.

CONTACT: STEC, Inc.
         Mitch Gellman, Vice President of Investor Relations
         (949) 260-8328
         ir@stec-inc.com
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding sTec, Inc.'s business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.