OCZ stock crashes to new low – will they survive?

Posted 05 November 2013 15:39 CET 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.

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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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