Look at OCZ's balance sheet and its cash flow. They are on track to run out of cash soon and then what? Bankruptcy? Issue more shares?
Perhaps Seagate should wait to acquire OCZ for a few quarters. By this time next year Seagate could buy OCZ for pennies on the dollar at a bankruptcy sale.
This cash issue is why the smart money is short on OCZ and why its short interest remains so high...
They can find cash from various sources:
take out long term debt (as of Feb they had none!)
borrow more from suppliers (payables >$100M in Feb)
tighten customer terms (receivables >$70k in Feb)
reduce marketing spend
grow operating profit (increase revenues, reduce material costs)
Their 22% gross margin is tight but not that tight.
Listen to July 10th CC as OCZ NO DEBT & 60 Mill $$$ line of credit that will be used in 3rd Quarter & again 4th Qtr we go cash flow positive with 40 MILL $$$$ in CASH on the balance sheet .... Please don't listen to these SCUMBAGS......
More revenue does not always equal more cash. Case in point look at OCZ last quarter results. More revenue = cash balance dropping by about $40M. In a low margin , high inventory business like OCZ is in more revenue can mean less cash and bankruptcy. OCZ needs to get control of its spending.
Sterne Agee analyst Alex Kurtz cut his rating on OCZ to "Neutral" from "Buy," saying that competitors were likely to introduce a broad array of products that would compete with OCZ
One of the biggest if not the biggest concern with OCZ was the depletion of cash during Q2. The outstanding cash balance dropped $50M to end the quarter at only $43M.
I'll take mercy and answer this one.
If you study where last quarters money went some paid off debt, some became accounts receivable, a lot went into inventory.
Last quarters sales were up 54%.. this quarter is estimated to be even more.
more sales = more revenue/accounts receivable/cash and less inventory.
plus they have a 35 million dollar line of credit that is untapped thats expandable to 100 million if needed.
but by all means, please continue to short.
THE SQUEEZE MAKES YOU STRONGER.