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OCZ stock crashes to new low – will they survive?

Posted at 05 November 2013 15:39 CEST by Jan Willem Aldershoff

OCZ’s shares lost nearly 40% in value yesterday. The company is still struggling with their financials and recently OCZ reported disappointing revenues. ¬†However the current crash comes as a surprise and it’s unclear why OCZ’s stock is taking such a plunge.

ocz_logo

The company had difficulties to publish their results over previous quarters which was required to remain listed on the NASDAQ. Due bad financial management caused by the former CEO, the company had trouble to meet the these requirements. ¬†Last month the company was finally able to post the results and they weren’t encouraging. However, the last quarter showed the company is working hard to get their results up again. The new CEO of the company, Ralph Schmitt, is trying to clean up the mess that was left.

Unfortunately it wasn’t the only issue the company was facing. Growth capital provider Hercules would also supply a $20 million cash injection if OCZ would meet certain conditions. Unfortunately the company was unable to meet these conditions and had to amend a loan and security agreement with Hercules which also cancelled 3.9 million in warrants. OCZ also has to payback the loan to Hercules by June 2014, together with a $6.5 million loan fee.

OCZ seems to be doing well on the enterprise side, but has difficulties on the consumer markets, mainly due issues with NAND supplies. Clearing the inventories impacted margins but the company hopes that it will benefit from that on the long term. Recently also rumors popped up saying OCZ’s struggling consumer SSD division might be purchased by Toshiba.

The company has not released a statement on the situation which is common when stock value fluctuate this heavily. It’s possible that the company would go bankrupt the coming time, but given OCZ’s position and the technology the company owns, it might be a good candidate to be bought. The SSD market is heavily competitive and other players might be interested in OCZ’s brand name and controller business.

At the moment of writing the stock is up nearly 3% but that’s only a small recovery of yesterday’s big dip.

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There are 15 comments

JReynolds
Moderator & Reviewer
Posted on: 05 Nov 13 15:59
    I do hope OCZ survives.

    On several occasions they have been the first to bring new technology to market and they have also helped push consumer prices down significantly in the past.

    IMO they also have the best support forum and I wish the excellent OCZ support team all the very best in the coming weeks.

    Kind regds, JR
    DukeNukem
    MyCE Resident Commenter
    Posted on: 05 Nov 13 21:27
      Best of luck, OCZ. It's unfortunate that managerial mismanagement mired you in monetary misfortune. I've always had a good experience with their quality products.
      Grim107
      MyCE Member
      Posted on: 05 Nov 13 22:59
        "...managerial mismanagement mired you in monetary misfortune."

        That was one too many "m" words there, my friend.
        Stereodude
        MyCE Resident
        Posted on: 05 Nov 13 23:28
          I think I must have stepped through the looking glass coming into this thread. Best support and quality products aren't the first things that come to mind when I think of OCZ.
          alan1476
          Administrator, Software Editor and Head of Promotions
          Posted on: 06 Nov 13 00:06
            Quote:
            Originally Posted by Stereodude
            I think I must have stepped through the looking glass coming into this thread. Best support and quality products aren't the first things that come to mind when I think of OCZ.
            Personally I believe they are great SSDs and as long as they are in business I will stick with them.
            aiolos
            MyCE Junior Member
            Posted on: 06 Nov 13 02:23
              They have the best SSD forum so I'd say their support is great. I've had 2 SSDs from them and I'd buy another one if the price is right.
              I hope they manage to stay afloat but I'm sure someone will buy them in they don't.
              JReynolds
              Moderator & Reviewer
              Posted on: 06 Nov 13 12:29
                Quote:
                Originally Posted by aiolos
                ...I'm sure someone will buy them in they don't.
                I agree. Let's hope it's Toshiba

                Regds, JR
                alan1476
                Administrator, Software Editor and Head of Promotions
                Posted on: 06 Nov 13 14:46
                  Quote:
                  Originally Posted by JReynolds
                  I agree. Let's hope it's Toshiba

                  Regds, JR
                  At this point we are all just guessing, but they have great R&D (in my opinion) and I still consider them the leader in many ways, without them the SSD wpuld never have exploded onto the market like they did. IMHO.
                  vroom
                  Administrator and Reviewer
                  Posted on: 06 Nov 13 15:03
                    Quote:
                    Originally Posted by alan1476
                    At this point we are all just guessing, but they have great R&D (in my opinion) and I still consider them the leader in many ways, without them the SSD wpuld never have exploded onto the market like they did. IMHO.
                    I totally agree with you Alan.
                    Tweakr
                    Reviewer
                    Posted on: 06 Nov 13 19:53
                      Quote:
                      Originally Posted by Grim107
                      "...managerial mismanagement mired you in monetary misfortune."

                      That was one too many "m" words there, my friend.
                      mmhmm...


                      I have to join those hoping for OCZ's survival as an independent company. They have indeed brought immensely much to the table in regards of cutting edge technology, performance, bang for the buck, and last but certainly not least; an unprecedented support forum community for SSDs.

                      I have frequented the forums of all the major brands, and they could never quite reach up to the level of OCZ.

                      Anyway, that's my personal opinion.


                      Regards,
                      Icy Mt.
                      MyCE Resident
                      Posted on: 06 Nov 13 22:34
                        I never bought an OCZ supply that didn't get replaced under warranty. I thought their customer service was pretty good. They certainly had plenty of experience in returns.
                        awdrifter
                        MyCE Resident
                        Posted on: 07 Nov 13 08:28
                          They have their ups and downs. I have their Agility 3 SSD, it's been working fine. But I've read horror stories about their other SSDs.
                          Kenshin
                          MyCE Resident
                          Posted on: 09 Nov 13 12:03
                            Quote:
                            Originally Posted by JReynolds
                            I agree. Let's hope it's Toshiba

                            Regds, JR
                            Toshiba sells their own SSD. Since this is not a discussion of philanthropy, what would Toshiba get in return from OCZ? Support forum? Surely the last thing Toshiba would want is some South Koreans living next to Samsung's SSD headquarter. They are former Indilinx employees, now working for OCZ.

                            From what I see, Toshiba's own SSD is both cheaper and better than OCZ's SSD made of Toshiba NAND. The real problem is that some of Toshiba's fastest SSDs are cheaper than some of OCZ's cheapest SSDs. Vertex 150 is good, except in princing, and low price, not quality, not support, not technology, was the very thing that enabled OCZ to have a niche market in the first place.

                            I don't see how OCZ can increase market share unless it sells 500GB SSD for US$300.
                            Dee
                            Senior Administrator and Reviewer
                            Posted on: 09 Nov 13 12:13
                              If Toshiba was to buy OCZ, then they would get Indilinx, which is arguably the most powerful consumer grade SSD controller, and certainly much more powerful than anything Toshiba has at the moment.

                              IMO, if it wasn't for OCZ, and the first Indilinx controller, we wouldn't be here discussing this, because SSDs would still be out of reach for most people on price alone.

                              Personally, I would rather OCZ stayed an independent company.
                              Kenshin
                              MyCE Resident
                              Posted on: 09 Nov 13 18:58
                                Indilinx was a minor name during the early years of SSD development, partly because it did not even exist during the first few years of NAND-based SSD.

                                Here are some old news links from 2007.

                                Samsung's third-generation SSD (PATA -> SATA 150 -> SATA 300)

                                http://news.inews24.com/php/news_vie...&g_menu=020200

                                Intel visiting Mtron, Samsung, and ONS of South Korea (Mtron made SSD controller, developed and sold SSD for servers and PC, Samsung made NAND, SSD, desktops and laptops, tablets and smartphones, servers, and ran hundreds of businesses that ran those servers, ONS made some of the world's first 2U rackmount type servers running RAID-1 NAND SSDs made by Mtron)

                                http://news.inews24.com/php/news_vie...&g_menu=020200

                                Mtron SSD

                                http://news.inews24.com/php/news_vie...&g_menu=020200

                                ONS

                                http://news.inews24.com/php/news_vie...&g_menu=020200

                                And even older, Mr. Hwang, the former Samsung executive, in 2005

                                http://www.etnews.com/news/device/de...7039_1479.html

                                Indilinx (after bought by OCZ) in 2012

                                http://www.embeddedworld.co.kr/atl/view.asp?a_id=5472

                                Why did Mtron fail while Indilinx survived? Mtron tried to compete directly against Samsung and Intel, but everyone inside South Korea knew quite well Samsung had been years ahead of Mtron and it was Hwang himself that lead the development and popularization of NAND and SSD - it was also in these years Steve Jobs at Apple met him to discuss NAND and SSD - so it should have been obvious nobody wanted to invest more into Mtron. Why Mtron actually disintegrated was not publicized in detail. Hwang quit his job as the head of semiconductor business at Samsung to save Lee Gunhee in 2008 from the regime and other forces that tried to destroy Samsung in similar ways they destroyed Daewoo and Hyundai. Under his leadership, Samsung experimented SSD in desktops, laptops, servers, and other types of devices for some years and it was soon widely known that Samsung employees were using laptops with Samsung SSD inside, not for sale yet. That was before 2005. Hwang announced his intention in September 2005 - quite an unlikely action for a Korean, but then he was educated at Stanford and worked for Intel. Indilinx was started by three South Koreans living near the headquarter of Samsung in late 2006. The key people of Indilinx were all those that spent around ten years working with flash semiconductor and flash storage.

                                But how could Indilinx survive when a much bigger and much more complete player, Mtron, failed ending in a disaster for all (except Samsung itself)? Easy, Indilinx needed to feed only far less than 50 people. And since they just developed the controller, they didn't require US$100,000,000. What they needed was more like one hundredth of that. Since Indilinx already had an office in Silicon Valley, it was relatively easy to keep in touch with OCZ and OCZ was Indilinx's largest customer. OCZ bought Indilinx and Indilinx, or its owners, became a large shareholder of OCZ in return.

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