CORRECTED-Big shareholder urges Stec to consider strategic alternatives

Thu Dec 6, 2012 11:37am EST

(Corrects name of shareholder in paragraph 2 to Balch Hill Capital from Balch Capital)

Dec 6 (Reuters) - Solid-state drive maker Stec Inc should consider strategic alternatives including a sale, its biggest independent shareholder said in a letter to the company that expressed "serious concern" about its strategic direction.

Balch Hill Capital, which holds 9 percent of Stec, said the company's response to intensifying competition has been to broaden its product line and dramatically increase its operating expenses, particularly in research and development, in an effort to gain scale and compete. "Yet, there is no commensurate increase in revenues or profits," the letter said.

Stec's largest shareholders are the members of the family of co-founder Manouch Moshayedi.

The company has a market value of about $225 million. (Reporting by Chandni Doulatramani in Bangalore; Editing by Ted Kerr)