We would not expect longs to see any of the liquidated OCZ money as the 2nd group of lenders and then Hercules Technology have payout precedence over anyone and then it trickles down past the creditors and bondholders and lastly the stockholders. Shorts will obviously profit off this news while longs should cut the losses while they can. It is a mixed bag according to what side of the fence you are on. What really killed OCZ though was a flawed business plan and an inability to adapt combined with poor leadership. The power division was also virtually ignored during this time period and sales fell off a cliff which is too bad as PC Power & Cooling made some very good products which we use in our offices. Once this was established (on a vastly reduced headcount), the company might have then tried to grow enterprise or sell the company to a compatible suitor. OCZ's focus should have been 100% on enterprise with a strategy of battening down the hatches and stopping the financial bleeding. It did not help matters when Ralph Schmitt moved from the board of directors to the CEO slot and took an automatic 700k bonus right out of OCZ depleted coffers. The controller chip division should have been licensed off or sold off as soon as possible as the majority of OCZ enterprise hardware was using LSI Corporation ( LSI ) chips anyway. OCZ should have made drastic cuts to its consumer division or even shelved it a little over a year ago instead of a mere 28% cut. In the end the strategy of going up against the NAND producers such as Micron Technology ( MU) proved to be a losing strategy (much like we have been preaching). Enterprise technology was prophesied to be the savior of the company but even its growth was lackluster although according to OCZ they did secure a small datacenter win for a nameless entity but that revenue has dried up according to the company. Gross margins imploded as well as revenues from the consumer division and the power supply division. Several shareholder lawsuits ensued as well as an SEC investigation. OCZ went from a high flying stock to cooking its financial statements which cost innocent invests dearly. We have reported on OCZ for quite some time and have been very vocal in our assessment that the company only has one option and that was to sell the company fast or they were going to go bankrupt. Hercules Technology ( HTGC) has taken control of OCZ's assets on deposit at Silicon Valley Bank and Wells Fargo. Since Toshiba has OCZ in such an unfavorable position, we would not expect to see a very favorable deal for OCZ shareholders. If they cannot reach a deal, OCZ has stated that it will still file bankruptcy and then liquidate the company. In the end, the shorts don't pass bets paid off and OCZ has officially thrown in the towel. Speculation on both sides was rampant with longs screaming it was a buyout and on the other side, shorts proclaiming it would be a bankruptcy announcement. OCZ Technology ( NASDAQ: OCZ) gave investors a rather sour early Thanksgiving Black Friday deal with a stock halt Wednesday morning at 8:05 A.M.
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