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OCZ Technology Group AŞ Message Board

  • madcoweater1 madcoweater1 Oct 11, 2012 7:48 PM Flag

    Making Sense of This

    I have been trying to figure out why HWSNBN decided that it was a good idea to increase sales, even if it meant negative margins. Here's what I came up with.

    1/ STX did put an offer on the table and the valuation was a multiple of sales. Any sale made at that point, even if it was at a loss would be recouped by the higher buyout multiple

    2/ They wanted to increase sales to impress a NAND suppler and get a deal done. The pricing on the new deal was so good that it justified the short term negative margin. They would make it up in future quarters.

    3/ They made a bad NAND purchase and wanted to dump it before it became worthless

    4/ Mei created a rebate offer and due to some error, omission or blow out demand end up losing money (like a Groupon offer)

    Cast your vote?

    Sentiment: Hold

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    • brandiisaretard@ymail.com brandiisaretard Oct 12, 2012 1:23 AM Flag

      I vote 2. I think he was going for the nand supply agreement. When his talks failed last year I bet they said your not worth our time, so he tried to grow revenue so fast. That would also explain why we went from focus on enterprise to consumer. It was easier to pump out drives on the consumer end.

      I can't see it being 4. Might be cause I want to think Mei is doing a good job though.

    • 6) They were out of cash and already maxed out their line of credit. So they had to drop prices to the point of negative margins just so they can move inventory to pay the bills and keep the lights on.

      How? Probably because they were stupid, dropped prices too much, and offered too many rebates. Then they couldn't move all their old invetory of Vertex 2, Vertex 3, Agility 3, Agitlity 2, Octane, Petrol and what not. So they had to sell them at major losses.

      Plus OCZ probably thought their enterprise products would take off but when people compared them to Fusion IO products and products from real enterprise SSD companies they realized they were junk and stayed away.

      This is what happens when a company that is a nobody tries to pretend they are a major player. If it wasn't for their low prices no one but computer nerds who play video games all day would buy OCZ products.

      Sentiment: Strong Sell

    • 5/ they needed to increase revenue so they could tap the credit line because they are going broke.

      you forgot this one!

      btw they did run groupon offers and many others like it.

    • I think your analysis makes sense. I believed RP had good intention when he pursued revenue growth over profitability. Too bad he did not comprehend the risk involved.

      Not easy to find a reasonable post the past a few days. Even more ridiculous is that a good post like yours got no reply, but tons of replies to those garbage posts. This board is completely ruined.

    • I say no.

      I do think this company is either totally messed up or they are in some kind of contract mode and they cannot speak.
      STX is probably after any possible extensions of enterprise business and OEM but now saying that if there was some customer incentives to a Lenovo, MSFT or other to gain value I would say that OCZ is backed into some kind of financial dilema from that. If it is from stupid retail consumer and purchasing that much bad nand, I would have a real problem with all of this company then especially if it real material like 20 million plus.
      I think there was a multiple and I am sure sales, stock price, and growth rate should have been considered.