"Based on the CEO's story, a cult-like following ensues, and the company is able to raise large sums of capital. The company puts up huge revenue numbers quarter-after-quarter, yet the profitability and cash flows never seem to materialize. And then one day, investors realize that numbers never reconciled and huge accounting inconsistencies existed the whole time. They also realize important facts were never disclosed and the product wasn't what management claimed. Ultimately, investors suffer large losses as the final chapter. OCZ Technology (OCZ) may just be the American version of the story above."
Yeah, pretty crazy. Still not the type of report I would ever take seriously, since they had never existed up until that report & stated they're short. Although, in hindsight, I wish I panicked w/ everyone else & sold that day, since I would have a lot more money left at this point. :)
Easy to agree with it now in hindsight. Hard to believe they knowingly deceived investors but it seems to be the case. If you reread the transcript from Q1 earnings it's painful. I guess we'll never know about that 'backlog' will we...
This is why we have boards, SEC, audits and other to prevent such things. Things like that happen when you have a following in the top positions such as accounting, CFO, and other even internal and external auditors. Essentially the Enron is the perfect such story. OCZ I believe is in to much of a company that relies on product reviews to build market share so it is a little harder but not impossible.