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OCZ Technology Group Inc Message Board

  • fwhite404 fwhite404 Feb 1, 2013 4:32 PM Flag

    Why I sold OCZ today

    I've only recently been following OCZ - became interested after buying the 512 GB Vertex 4 about 1.5 months ago (which has been fantastic).

    I bought in at 1.91 a few weeks back and then sold at 2.10 today.

    I've been following Amazon rankings & ratings closely. With very high Amazon rankings and an accelerated frequency of customer ratings over the last several months, it was my impression that Vertex 4 most have been killing it in Q3 , but the revenue guidance doesn't really support that.

    Perhaps the first part of Q4 will be great, but the estimated 35 million in receivables at the end of December does capture some Q4 performance and it's against 30 million in payables.

    Vector looks great too in industry & most customer reviews, but they also look like they have some driver issues to fix that are resulting in a relatively high proportion of 1-star ratings. As they did with Vertex 4 and other brands, perhaps OCZ will fix the Vector driver issues in time. With its fragile cash position though, there's very little time to execute on these things. Furthermore, if they are planning to compete in the middle to high-end markets for a price premium, they can't afford these early complications that undermine overall quality perceptions.

    Vertex 4 has been falling on Amazon's best-seller list quite rapidly over the last few weeks. The 128 GB is ranked 8th and 256 GB ranked 11th now? There also appear to be some inventory issues with Vertex 4, which makes no sense because I imagine it's the company's workhorse product right now. The 512 GB was out for weeks - and now they're saying the 256 GB will take 1-2 months to ship (perhaps this is an Amazon error).

    harddrivebenchmark dot net has been showing decreasing OCZ market share each day for the last 2 weeks or so.

    and while the SSD revolution may sweep through, news lately has been pointing to a slower transition than expected.

    buy out, of course, remains a strong possibility, but OCZ has so little negotiating power right now.

    ...so I'm watching the stock price right now. If it floats down over the next few weeks as the company finalizes their financials and I see a promising reversal of trends on Amazon rankings/ratings and market share on harddrivebenckmark, then I'll likely be back in.

    since most of you have been following this company for longer intervals, let me know how my reasoning/ justification may be off.

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    • The 512GB Vertex 4 has been discontinued. There is only the 128 and 256Gb models now. The V4 in general has dropped a few spots on amazon top sellers because they raised the prices on the drives which is expected. OCZ already made it clear they are going to sell less drives but make more $ on each drive. If you notice, the top drives are samsungs cheap TLC version of the 840. As for harddrivebenchmark site.. another poster on here said hes been following the site for months and at one point OCZ dropped from the 8's to the 7's and went back to the 8's. Just because that % drops doesn't mean they are selling less drives because SSDs sales in general are increasing as more time passes. An example of this would be a smaller slice of a bigger pie. As far as Vector firmware is concerned, I would expect a new firmware sometime this month.

      Sentiment: Buy

    • If you are happy with a ~10% gain and met the price target you wanted you can't really be too disappointed.

      Sentiment: Strong Buy

    • Accounts receivable was over 89 million and it now down to 35 million. Accounts payable was around 91 million is down to 30 million. Newegg has 256gb Vertex 4 and they are 20 dollars more than Amazon. Amazon is probably sold out. There is a very small OEM deal with Vertex in a company that makes supped up video game computers.
      The revenue numbers are very concerning and I do not know what the plan is but essentially I am seeing about a 63 cent loss for quarter two and 23 cent loss for q3.
      As well the stock is still in no mans land and I am more worried about financing. Sincerely though they almost have to either do one of the following in the next 3-6 months. 1. show a profit in the 4th quarter? 2. Sign a nand deal? 3. Be bought out? 4. Announce an OEM of significant value 5.Combination. 6. A stock offering below 5 dollars is sometimes not allowed by SEC and also it looks badily on the company so that should be the last resort until mid year or after some sort of announcement. You may also be seeing canibulazation of one drive for another that often happens. The big question is do you also consider a spin off of Indilinx and barefoot if you get oem deals then make Vertex and power supply a separate unit, I would only think that would work if you picked up like another interest like gaming.

      • 1 Reply to hokiestock
      • brandiisaretard@ymail.com brandiisaretard Feb 2, 2013 10:21 AM Flag

        We are selling less drives because we are asking for higher margins. It is actually very simple reason. No more fire sales at a loss. Say an ssd costs $100 expense to make. would you rather sell 1 of those ssd's for $150 or 3 of them for $110.

        Under Peterson, we were selling 3 for $110. In order to be profitable we would have needed about $500mil revenue per Quarter. It wasn't going to happen. R.S. says no, we are going to sell less drives, for higher prices and actually be profitable. With this new model we only need $110 mil rev for profitability. Revenue might have dropped in half, but the number we need to be profitable is 5x lower.

    • Your analysis is very good. THats why I sold my position at 2.33.
      The company right now has only 9m in cash.
      7m debt
      And revenues which will not let it break even. It needs at least 110m quarterly rev to break even according to the CEO, its currently at 85m AT MOST.

      If you think It will be bought out, buy jan 14, or jan 15 calls, and stay away from it unless it goes back to 1.60-1.70's

      Sentiment: Hold

 
OCZ
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