Deals, discounts and allowances (DD&A) will offset the sales line in the quarter. Mei and Singh would have known the level of deals and allowances they signed off and did not communicate to finance or the board. Material weakness for sure. Looking at the various retailer websites OCZ SSD drives on sale for ~ average discount of 35%. Given previous low revenue forecast of $110mil at average DD&A % of 35% I'm estimating revenue at ~$66mil. Inventory on hand at previous quarter represented about 6 months worth and now requires a write-down based on conference call this morning on being more focused and getting away from shot gun approach to market offerings.
Worse case scenario, another $75mil write-down to inventory to flush discontinued product lines.
Add a $60mil write-down of goodwill to zero (non cash item at least).