Ocz Technology Share Discussion Threads

[whine] 16/10/2012 11:57

Orient

I am sure you bought plenty at $3 and above

Hope you lose a lot as smart i like but over smart like you NOT

He He He

[mark knopfler] 15/10/2012 20:30

Shareholders might want to join in in the lawsuit.

You may get compensation if it succeeds and the share price will probably rise if it doesnt.

[whine] 13/10/2012 15:24

Finally a sensible post from the other thread

Well said


ch131
13 Oct'12 - 14:46 - 1035 of 1035


Good luck, Lego! I'll be relieved if we ever see the day when OCZ is not so crazy! It has been historically proven to make extreme swings. This last drop from $7 to $1.50 has been fuelled by fear of bankruptcy, lawsuits, fraud etc. I can't imagine any institutions buying until the figures are released of just how bad things actually are, bso until then, bar anymore buyout rumours we are at the shorts' mercy.

The sooner they get the results out, the better, all this uncertainty is nectar to the shorts, but I'm sure that RS wants them to be as thorough as possible (get all the bad news out) so that they can move on- my real fear is that it's not just Q2's books that were cooked, and that it goes back a lot further. The delay this would cause would be catastrophic for the co. I find it crazy that things have gone so pear shaped in the last quarter, when demand is still strong, but I suppose cashburn was high also in previous quarters.

[ch131] 13/10/2012 14:46

Good luck, Lego! I'll be relieved if we ever see the day when OCZ is not so crazy! It has been historically proven to make extreme swings. This last drop from $7 to $1.50 has been fuelled by fear of bankruptcy, lawsuits, fraud etc. I can't imagine any institutions buying until the figures are released of just how bad things actually are, bso until then, bar anymore buyout rumours we are at the shorts' mercy.

The sooner they get the results out, the better, all this uncertainty is nectar to the shorts, but I'm sure that RS wants them to be as thorough as possible (get all the bad news out) so that they can move on- my real fear is that it's not just Q2's books that were cooked, and that it goes back a lot further. The delay this would cause would be catastrophic for the co. I find it crazy that things have gone so pear shaped in the last quarter, when demand is still strong, but I suppose cashburn was high also in previous quarters.

[whine] 12/10/2012 22:36

Legolass 12 Oct'12 - 21:41 - 1034 of 1034

Bought some on IG just for the fun/pain of it. I need the crazyness of OCZ in my life!

The post above says it all about the mindset
of the posters.

How f cuking stupid you are Leo

Go crazy about your family as there is fun
but to get emotional about a f cuking stock
is plain moronic and it shows how weak
your mind is and how obsessed you are
with a share.

Says it all for me

I hope this goes below $1 so you can
feel both Fun and Pain

[legolass] 12/10/2012 21:41

Bought some on IG just for the fun/pain of it. I need the crazyness of OCZ in my life!

[beeks of arabia] 12/10/2012 19:00

I feel genuine sorrow for anyone still holding.

I really hope it comes back for you - although I can imagine an emergency placing at $1 judging by the trading.

[ch131] 11/10/2012 14:30

Good point about keeping the 40m on the balance sheet, Lego. I think the bear argument has overlooked this, and if Art has kept his word, then that's one of the few potential positives to look forward to! I think the negative margins would explain tapping the debt facility, and not the 40m cash, but we'll have to wait and see.

[legolass] 11/10/2012 13:49

Swift good analysis. You are right - the issue the bulls are missing here is a potential liquidity crisis and the need for an emergency fund raise. However,(1) on the last CC before he was fired RP made it clear there were no cash issues or a need to raise cash (of course reasonable now to ignore that but RP in alot of SEC trouble if that was a straight lie), (2) At the Q1 CC Art said he wanted to keep $40m on the balance sheet and would use the facility rather than dip into that amount. Clearly if they have spent the $40m (which is possible given the negative gross margin comment) and have tapped the bank line then Schmidt will have to produce something sensational to wriggle out of that. But as CH points out he's not stupid and he left a job to take this one...he must have some plan........

[ch131] 11/10/2012 13:29

And with the books cooked at the moment, they will not be able to arrange further finance. That is one of the reasons I imagine that he said they would get the amended results out "expeditiously". They may well be able to convince the bamks that with a swift restructuring, EBITDA targets will be met, but this is all conjecture until we see just how bad the results were.

[swiftnick] 11/10/2012 12:56

The biggest problem is cash. Ralph Schmitt was asked during the cc what the current cash position is and he declined to tell us. But he did admit that they have tapped the credit line. However, one of the questioners pointed out that the credit line has EBITDA covenants attached. And the company probably isn't meeting these right now.

They could try to raise cash by discounting old stock but, er, they seem to have tried that one already. So we are left with the spectre of a fundraising which, if they can get it off the ground, is likely to be deeply discounted.

Best hope is a takeover bid, which would be a lot cheaper now for a prospective suiter than it would have been in the summer. But it is unlikely that anyone will show their hand until the Q2 numbers have been published. So in the meantime we are left in a period of uncertainty.

[ch131] 11/10/2012 12:17

I know how you feel, Tim. Basically Ryan's policy of keeping his foot on the gas going for market share at whatever cost failed spectacularly, and the wheels came off last quarter. Maybe I'm foolishly optimistic, but there is still a chance that Schmitt can turn this around- I can't help thinking he quit a good position to come onboard, and you wouldn't do that if you thought the company was going down the pan would you?

[timnicebutdim] 11/10/2012 11:58

oh well, no Ferrari for me then, had a gut feel that something bad was on the horizon as i posted a while back, but not quite as spectacularly bad as this. Time to stop looking and tuck them away in the bottom drawer figuratively speaking.

[swiftnick] 11/10/2012 10:18

Listened to the conference call and wasn't impressed with Ralph Schmitt. A lot of unanswered questions remain. The company seems to be saying that Q2 sales were constrained by NAND shortages whilst being simultaneously boosted by overgenerous customer incentives. This is incomprehensible.

The cash position is particularly worrying given the high level of inventory at the start of Q2. If some of this was old stock then some of the customer incentives made sense as it would have been necessary to have a clear out ready for new product lines and also generate some cash. But it looks like large customer incentives (discounts to you and me) were being handed out on the new products as well. If true then this points to not just a failure of management but a problem with organisational culture.

Schmitt has a tough job regaining credibility from here. His stuttering performance during the conference call was not a good start. And, yes, Arthur Knapp was introduced as being there but said nothing, giving the appearance of an ineffective CFO.

[ch131] 10/10/2012 21:29

OCZ: Accounting Issues And A New CEO Who Gets It - Is A Turnaround Likely?
October 10, 2012 | 19 commentsby: Ashraf Eassa | about: OCZ, includes: MRVL, PLXT, STX Disclosure: I am long OCZ, MRVL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. (More...)
OCZ Technology Group (OCZ), a manufacturer of solid state drives, recently announced a number of material news items. To recap the prepared remarks of the conference call:

The revised revenue guidance issued on September 5th for the most recent quarter can "no longer be relied upon" due to "customer incentives that were in excess of what was normal and customary in the past"

New CEO: Ralph Schmitt, Former CEO of PLX Technologies (PLXT)
In Q2, there was a huge emphasis to "grow market share at all costs", so "extraordinary incentives" were undertaken (rebates), so the company will be delaying its SEC filings to ensure a "proper accounting treatment can be applied to this event"

The company's cash position has declined and the company has now accessed its credit facility

Future actions will be focused on "innovation, quality, and profitability"

Negative gross margins

Earnings call will be rescheduled as quickly as possible.

At the call, the Q&A session was particularly helpful, with the following key points noted:

While the company is still undergoing a review process, it does not seem likely that the company will have to restate prior results - fraud is pretty much off the table.

Company sees itself "rationalizing the product line" and further sees that the diversity of product line is inappropriate for a company of OCZ's size. OCZ plans to migrate away from more commoditized areas of SSDs and move more into the high end of both the client market as well as pushing further into the enterprise market.

OCZ will be focusing on differentiation on the technology side (controllers, software) - the firm will not try to go head-to-head against the NAND flash fabs
The company is "making significant progress" with its previously mentioned "Web 2.0 deals," and these are "key focuses" for the company, but no comments on particular customers.

Righting The Ship With A Sound Plan

The new CEO is taking OCZ in the right direction. OCZ's strength has been in its strong acquisitions (Indilinx, PLX team, SANRAD) which have positioned the company to have a healthy long term outlook in the enterprise space. The problem, of course, was that previous management wanted to build OCZ to be, in the words of ex-CEO Ryan Petersen, "the next Seagate (STX)." Unfortunately, this meant trying to compete for consumer market share on highly commoditized drives while having a significant cost disadvantage compared to the NAND fabs.

The direction is to focus on higher margin businesses where the key differentiation occurs on the technological level (controller, software, features), rather than on a volume level. This will likely result in less-than-explosive revenue growth, but this will also lead to healthier, profitable growth. In fact, Mr. Schmitt made it abundantly clear that the company was going to focus on profitability and on delivering shareholder value - something that ex-CEO Ryan Petersen did not seem to give much priority.

Is It Too Late, Though?

The pressing question, though, is whether it's too late for the company. Fortunately, OCZ already has its "Barefoot 3" controller, its jointly developed PCI-E "Kilimanjaro" platform with Marvell (MRVL), and an enterprise flash caching software stack courtesy of its SANRAD acquisition. There is a lot of value here, as the company can focus its efforts on the following business opportunities:

High gross margin PCI-E flash caching solutions
Licensing controller technology to the consumer SSD players
Selling high end, higher gross margin consumer drives, with an emphasis on high cost, high quality devices (similar to what Samsung and Plextor do)
Selling SATA/SAS hard-drive form factor SSDs into enterprise usage. This would leverage the in-house controller development as well as consumer SSD development efforts
This would be a small, well-oiled, focused business. The company's fairly large headcount of 700 could be reduced significantly in restructuring efforts, relieving operating expense pressures that the company has continually faced.

Further, once the company has proven itself to be a flexible, agile player in these key, high margin SSD-related businesses, it would naturally become an acquisition target for the larger storage companies. However for this to happen, the company needs to be lean and have established a track record of technological leadership and business execution.

That being said, the company's cash burn and its tapping of the credit facility means that every dollar needs to be very carefully spent. There's no room for missteps, and it would only take a few fundamentally bone-headed moves to sink the company at this point.

A Speculative Buy

In light of these developments, and in light of the share price decline, OCZ is a buy for speculative investors. There's still a lot of uncertainty here, and as I noted above, the company's financial position is one of extreme vulnerability. New management will have to fight to keep the company alive, but if a turnaround is successful, OCZ can be a very prosperous player in the high growth solid state drive market, albeit in a slightly different fashion that founder Ryan Petersen had envisioned. It won't be the next Seagate, but it could be the next SandForce.

[beeks of arabia] 10/10/2012 20:43

Cripes!

What a bl%%dy mess!

[mark knopfler] 10/10/2012 20:41

You have a point Lego.

Perhaps if the new CEO has a good previous record, investors may give him a chance.

SSDs havnt lost their appeal overnight, but companies seem to have trouble making any money out of them.

Good luck, whatever you decide.

[legolass] 10/10/2012 20:23

Hahaha accidentially just read some of the first postings on this Board from last year....Guess the warning signs were there then. Mark I understand but you have enough experience of AIM to know that management teams can continue to do a good enough marketing spin to do the "last fundraising before profitability". Look at Cyan and Sarantel off the top of my head. Do you think the new CEO wouldn't try a cheeky $25m raise at 90c to buy himself a few months to turn it around. Obviously hoping we dont get there!

[mark knopfler] 10/10/2012 19:27

I'm not sure an equity raise is possible down here Lego.

[legolass] 10/10/2012 19:02

Thinking of selling what i have left. Real chance of an equity raise in my view. Disappointing but average in price 76p

[gb234] 10/10/2012 16:54

Mark becareful here mate,you could lose the lot.Best wishes gb.