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OCZ Technology Issues Update for Investors

Discussion in 'News' started by btarunr, Apr 17, 2013.

  1. btarunr

    btarunr Editor & Senior Moderator Staff Member

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    OCZ Technology Group, Inc. (NASDAQ: OCZ), a leading provider of high-performance solid-state drives (SSDs) for computing devices and systems, provides business update for the fourth quarter of 2013.

    The Company is disclosing certain preliminary information about its fourth quarter of fiscal 2013 that ended on February 28, 2013, subject to certain closing procedures and further review by the Company and its auditors. As previously reported the Company estimated that revenue in each of the unreported quarters ending August 31, 2012 and November 30, 2012 is in the range of $65 million to $85 million. This range takes into effect the impact of the reclassification of certain customer costs from operating expenses to revenue, the significant reduction in channel inventory, the timing of revenue recognition and reserves for product returns. The preliminary revenue range for the unreported fourth quarter of fiscal 2013 is estimated to be between $65 million and $70 million.

    The Company also expects positive gross margins for the fourth quarter. This is an indication that the operating adjustments regarding restructuring and the restatement are behind the Company. Gross margins will continue to improve in the coming quarters due to the streamlining of products and focus on enterprise business. Operating expenses are estimated to be between $23 million and $26 million for the fourth quarter and include non-recurring restatement related charges of approximately $4 million which includes the completion of the internal investigation and other legal matters. The company's inventory levels also continued to improve as inventory on hand at the end of the fourth quarter was less than $50 million and channel inventory was at a 2-year low of less than $20 million.

    Unshipped backlog for the fourth quarter was approximately $18 million, as NAND flash supply constrained revenue in the quarter and suppliers are allocating certain NAND flash products. NAND supply is expected to affect our first quarter of fiscal 2014 as well. The Company's strategy to diversify NAND vendors has helped during this timeframe and is planning for and expects the supply of flash to continue to be tight throughout calendar 2013.

    Revenue generated from Enterprise solutions are expected to increase sequentially for the first quarter of fiscal 2014, ending on May 31, 2013, which will also contribute to the improvement of our gross margins as many previously engaged customers are now taking product.

    On April 11th, the Company received a notification letter from NASDAQ regarding continued non-compliance with NASDAQ Listing Rules and that the Company's securities were subject to delisting. The Company will request a hearing before the NASDAQ Listing Qualifications Panel. In accordance with the NASDAQ Listing Rules, in connection with the hearing request, the Company will formally request a stay of any delisting action pending the conclusion of the hearing process to extend the delisting deadline.

    The restatement effort is continuing and the Company has made substantial progress towards meeting its objective in getting current with its filings. Although it is difficult to predict when the Company will become current with its SEC filings, the Company and auditors have added additional resources that should improve the ability to bring the restatement to closure as rapidly as possible.

    "While we know our shareholders are disappointed in our inability to becoming current on our financials by the April 8th NASDAQ deadline," stated Ralph Schmitt, CEO of OCZ Technology, "the OCZ team and our auditors are working diligently in bringing this to closure as our review procedures for the accounting of the restatement is taking longer than we had anticipated in an effort to ensure that it is accounted for appropriately. The restatement progress does not change the fact that our business continues to operate effectively and we continue to improve our operational situation."

    Schmitt continued, "In the quarter we lowered our borrowing levels and paid off our credit facility with Wells Fargo. We then engaged in a loan with Hercules Growth Capital that gave us more capital to continue to improve the business. We also were able to reduce our operating expenses even further in order to lower our breakeven point. We have drawn $10M against our $30M credit facility, have approximately $10M of cash on hand and are current with our key vendors. All of which are improvements in these metrics on a quarter to quarter basis."

    The Company has recently appointed a new CFO, Rafael Torres, and an enterprise solid state storage experienced VP of Sales, Wayne Eisenberg, and continues to hire key enterprise talent, primarily in engineering and sales. The Company has also made progress in the recent quarter by introducing a new application-specific strategy in the enterprise by going to beta on its ZD-XL PCIe solid-state solution designed specifically for SQL acceleration. This product represents the culmination of hardware and software coming together as one tightly integrated and optimized solution. Included in this total solution are implementation wizards that make installation quick and simple for data center customers.

    The Company also launched its first drives using leading-edge 20 nanometer (nm) flash and expects the majority of product lines to transition to this technology node by the end of its second fiscal quarter. The Company will also move the majority of its consumer drives to in-house controller technology in this same timeframe. Utilizing the Company's proprietary Barefoot 3 controller, the Vector Series of SATA solid state drives continue to ramp in volume in the high-end client market and is recognized by leading independent trade publications as a performance leader in both sequential transfers and sustained performance, most recently winning Editor's Choice Awards from PC Gamer and Maximum PC magazines. Moving forward the Company will continue to leverage next generation versions of the Barefoot 3 controller with the latest generation flash devices to offer customers the best balance of performance, reliability and value.
     
  2. lemonadesoda

    lemonadesoda

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    What is it with ICZ? They are always having to give re-statements of their financials. Is their finance department in such a mess the auditors and SEC require them to keep restating and adjusting the results? Either incompetence or serious window-dressing. Perhaps they are are the point of insolvency and have to publish to keep their credit lines open. No other company here in the tech-world has to keep restating their figures like ICZ does!
     
  3. Jorge

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    Prior to a few months ago OCZ had significant accounting issues as they tried to paint a rosy picture on a sinking ship. Because they have been under investigation by the SEC for essential financial fraud, they have had to re-state, i.e. correct the false financials from the past and issue essentially warnings for the future because there is a lack of trust in the company until they prove their integrity and solvency. The past OCZ owner has left to start another venture and the replacement management is trying to bail water quickly from a sinking ship. The verdict is out if they'll make it to shore in time...
     
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  4. Dave65

    Dave65

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    I wouldn't buy OCZ if my life depended on it.
     
  5. lemonadesoda

    lemonadesoda

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    Thanks for the back story. My guess was pretty close.

    Why do we get this news on TPU? It is only causing reputation/brand damage. Their PR firm should not be sending these types of press releases to "tech news" sites. Fire the PR firm. Save dollars.
     
  6. remixedcat

    remixedcat

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    Logitech should buy em out
     
  7. Dj-ElectriC

    Dj-ElectriC

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    No one should buy em out, that's the simple evolution of capitalism. I'm happy the competition made it hard on them. I'm happy there is a competition.
     
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  8. FreedomEclipse

    FreedomEclipse ~Technological Technocrat~

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    Having bought of OCZ ram in the past as well as owning a Vertex2E SSD, Its sad to see that they have fallen into such a situation where they are barely hovering above the brink of going bust.

    for the record, I never had any issues with their RAM or their SSDs but the problem with their SSDs didnt start happening until after the vertex 2 series. OCZ is like marmite, you either love them or you dont.

    Maybe they should have tried to innovate more and branch out into different areas of computing where there would be less competition instead of trying to run with the big dogs when they knew it wasnt financially viable.

    Many companies have ceased all operations until they decide what direction to take the business in but i guess with OCZ it was a little too late for that.

    OCZ is but a shadow of its former self.
     
  9. magibeg

    magibeg

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    I used to buy OCZ, but their quality has really gone downhill over the past several years. Probably also the fault of the accounting department ;)
     
  10. Jorge

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    As with many companies OCZ rushed crap to market without proper validation as does Asus with mobos, IME and that of many other consumers. The result is chronic product issues. Asus is large enough and not a U.S. based company that the SEC hasn't yet decided to go after them but I hope this eventually happens. OCZ started out with a questionable Biz model with binned RAM. The early stuff seemed to function as advertised but was absurdly priced. As sales grew quality seemed to drop. When they could no longer compete on RAM then dropped that product line and rushed half-baked SSDs to market. A search will confirm the horrible problems consumers have had with numerous OCZ SSD series and with attempts to get proper warranty coverage for the defective SSDs.

    IMO, time finally caught up to the shell game and CEO Ryan Petersen had to resign or perhaps he was forced out? Interestingly the CFO had left a few months prior to Petersen. The whole operation appears to be a cluster so new managment has their hands full trying to save what I believe is a sinking ship. I would expect the SEC to go after both Petersen and former CFO Arthur Napp but we'll see if they are too small to bother with.
     
  11. jmcslob

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    They also had several faulty PSU's mislabled gaming keyboards...etc...etc...
    Yes they once sold decent memory but fell flat on their face when G.Skill and other companies were selling higher quality memory at half the price...Their SSD's are garbage and at the price point they are sold you can simply do better in almost every way...

    The only OCZ product that I ever liked was a mouse...The OCZ Behemoth...It got a couple of bad reviews from no name twats and they quit making them...They were fantastic for the big handed consumer and should have never been abandoned...DAMMIT! I want another Behemoth you asshats and you don't make em again I hope you do fail...ASSHATS!
     
  12. remixedcat

    remixedcat

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    What sites gave the mice bad reviews??
     
  13. jmcslob

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  14. remixedcat

    remixedcat

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    ha! you should see how asinine people are about the G700. It's a damn near perfect mouse and people nitpick about stupid crap.
     
  15. FreedomEclipse

    FreedomEclipse ~Technological Technocrat~

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    apart from its price and firmware issues?
     
  16. remixedcat

    remixedcat

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    Firmware issues???

    I got the mouse for 60USD....that included shipping.
     
  17. m1dg3t

    m1dg3t

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    I think the main thing causing their downfall is their exit from the DRAM market, forcing them to shift things around to keep them looking good on paper for investors as they try to move into new markets. The SEC should force them to come clean instead of continually extending the BS. I really would like to see Ocz return to being a well respected, profitable company as i have used many of their products over the years with excellent results & service.

    Never had any issue with an Ocz PSU, have used about 10 different units in the last 10yrs or so between my rigs and family/friends. Ranging from their basic entry level units to their full out enthusiast grade units. Maybe i/we was/were just lucky?

    Their zx series of PSU is a damn good buy when found on sale, which is often! Thankfully :) I reccomend them as often as possible :eek:

    Up untill my most recent build i have always used Ocz RAM, only had issues once. It was my fault, BH5s don't like 3.5v without proper cooling! :banghead: The MOBO they came out of is still functioning, albeit with a scorched DIMM slot :roll::roll: In that case i had replacement stix within a week of filing the RMA! Plus they helped me get the new ones up to speed ;)

    Never tried their SSDs so can't comment there, but seems like they had controller issues there for a bit? :eek:
     
  18. remixedcat

    remixedcat

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    a few brands had trouble with Sandforce controllers... that's why I got my Samsung instead.
     
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  19. m1dg3t

    m1dg3t

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    I guess Ocz got the wurst of it because they had the most units in the field :confused:

    Like GM cars, as a mechanic you think "Hey these are shit! I fix 5 everyday" Failing to consider the fact that they out number the competion 2 or 3 to 1... ;)

    If i have 1k units in the field and you only have 100 or 200 (for example) who is gonna have a higher warranty rate? :respect:
     
  20. SirMango

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    I'm pretty sure the OEM of the Behemoth was Raptor (now Raptor-Gaming): http://raptor-gaming.webnode.com/products/raptor-gaming-m3-platinum/

    So, technically, you never really liked a 'true' OCZ product. :p
     

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