They now owe $7M on the credit facility (from $15M) with less than $50M in inventory (from $~75M). No comment on AR or cash.
Their Credit Facility can expand to $20M (from $35M).
Apparently Wells Fargo doesn't think they're going to go under...
Maybe I should reread it but didn't Wells Fargo force OCZ to reduce the maximum loan amount? Isn't that a bad sign when it comes to needing more cash infusion?
On the other hand, I agree with everyone else. It sounds like R.S. does not care about the Wells Fargo loan since he is able to move inventory and pay down the debt.
Just read the release as I get them from the company. Quick thoughts:
1) Audit investigation complete - Positive
2) No new unforeseen issues - Positive
3) Debt on credit facility down to $7m - Positive
4) Deal struck with Wells Fargo to avoid default - Positive
5) Inventory being cleared out and levels down - Positive
6) Strong CES reception - Positive
7) Letters from Nasdaq - Neutral (anticipated)
8) No estimate on when new numbers will be released - Neutral (anticipated)
I think this will move significantly higher.
this update is a net positive. While the credit line was lowered by a large amount and the interest rate was adjusted upwards this was largely expected as the company has no negtiation power here. In fact conditions look better than I would have thought.
draw from credit line down to $7 mln due to better inventory management - quite positive
all other topics came in largely as expected
while I don't like this company as it has been nothing short of a fraud so far they finally might have a chance to turn the corner here so I would expect the stock to move up tomorrow.
"No unforeseen issues" - I don't think this is true.
There are at least two major issues that I'd like to get cleared up.
1) What is going to happen with those class action lawsuits?
2) How are they dealing with NAND supply and what are they doing to mitigate the risk of another "shortage".
My personal opinion is both of the issues above could have come from the previous management (Ryan). Still think people are waiting for more clarity on the above.