Decided to start a new thread pipster....Hopefully we can get some others input as well & see what the general consensus is for margins.
Please no bashing/hate posts. Lets see if we can have a normal, well though out discussion on this board like the good ol days.
Convo to date, started from discussing of recent price drops at Amazon/Newegg"
"you do know that was a lot off the 50% margin.....looks like they might hit 32% on these but why put it on sale already"
"....since when would a GM of 32% on a CONSUMER SSD be a bad thing? If I recall correctly, I believe most consumer drives have margins around 15%."
"most SSD makers are in the 40-50%"
"Sorry, I was speaking in regards to what OCZ's margins are on their drives as I don't follow other ssd manufacturers that closely.....OCZ Consumer 15% & OCZ Enterprise 50% (approx)...However, 40-50% are believable numbers for a Samsung/Micron/Intel, but not a Corsair/ADATA/Mushkin/etc....So from an OCZ standpoint, if their consumer drives are selling at 32% GM's, things are moving in the right direction....Remember their highest ever GM for a quarter was around 25%."
"What are all the numbers you are using to get your 32% GM's? I'm not doubting your numbers, just curious to see what calculations/assumptions you are using"
"only things we can go off of is NAND spot and controller base price. add both of them together gives you a high end at 32% everything else adds in but NAND is the biggest thing approx 80-90% of cost. and this why those with inhouse NAND make a mint."
"What are your current numbers for those? Also, what numbers are you using for the remaining components (PCB/resistors/DRAM/Metal case)? What about Packaging/Acronis software? Etc...."
"tradn2live NAND is approx $0.6875 per gb a controller is about $15, the rest is guessing. 32%i should be about right for high-end guessing."
its fair to say that GM's will range between 30-45% for consumer.... i do have another comment, related to GM's--the valuation of the company going forward, how do we gauge this new company? if we are now focused on profitability and not too concerned with market share... if we pull in say 40-50M in Q4 for consumer SSDs and make a small profit, is that better than pulling in 113.4M and a loss? well i guess much of this depends on our FY '14 guidance (if there is one) and enterprise ramp... will be very interesting on how the market valuates us especially with our own controller now.
30-45% seems too high. I'm pretty sure on one of the investor days or CC's that the average GM on their consumer drives were 15%. They should be slightly higher due to the higher prices/lack of rebates, but NAND prices have increase the last few months as well.
$40-50M in revenue?!?!??!!?!?! Are you high, dom? RS said he's not looking to take market share, but that doesn't mean revenues will be cut to 1/3 of last quarter sales. Remember, Q3 & Q4 are the big selling quarters. Revenue should be flat in Q3 ($90M-110M) due to fire sale prices, but shipments should be up.....There is no way they could make money at 50M per quarter. Even w/ 50% margins that would net $25M & Q2's opex should be approx $40M. With them implementing the job layoffs, they save $5M a quarter ($20M for the year). Add in cut of a few million more for small R&D cuts, facility closures, etc & they should at a minimum still have $30M in OpEx.
If they drop to 20% YOY growth & become profitable, they'll probably get a valuation in line w/ WDC & STX, which have a P/E of around 5-10.
OCZ has had negative margins for 2012 as you know. The first quarter was -9.86% and second quarter was #$%$ percent and that as you know is looking at Revenue minus expenses. In august of 2011 there was profit of 4.1% noticeable the attack on OCZ began there on the stock. So essentially lets assume we gain an additional 10 percent pick up of margin on expense side. Which according to the financials is usally around 85 million so we pick up 40 percent of sales of vector of 10 percent of 85 million or about 4 million dollars. Then lets assume we have reduced payroll by 25% that would save an additonal 4 million per quarter. With research and development staying the same. So on the consumer side we would pick up an additional 8 million dollars a quarter is my guess on the Vector series. That is assuming Vector is 40 percent of sales. Essentially what I would do is as well look at the savings on the percent of sales and cost of good sold and we may be able to come up with better figures moving forward. Overall though the point I am making is that RS is moving in the right direction and Imagine a small 20 percent growth from the SSD market and then we grow OEM or enterprise by lets say 100% this year or more. You could assume we have as much as a 15 to 20 percent change in cost structure in two quarters and if revenues essentially stay the same or grow to the same area do to market growth you still should have a stock more fairly valued very quickly.
The 'low-end' consumer drives will be 20%, while the high performance drives (like Vector) will be in the 30-40%. Enterprise will be 35-55% (depending on interface). Too many variables to really say what the true GM will be when you factor in all the product mix. If PCIe ramps, the GM profile really changes.
Then of course you've got VXL and Controller licensing which is all extremely high GM business. This is why it'll be nice to get some more color on the progess of this business.
I doubt very much revenue would drop that much just because they discontinued all the older stuff. The only older stuff that really sold was the vertex 3 and agility 3 and with them gone will just add to Vertex 4 and Agility 4 sales. Nobody bought vertex plus, petrols, octanes etc. add the fact that demand for SSDs in general is higher than 6 months ago esp during the holidays and I would think you get a revenue number around 80m. Main reason for it being lower is no more rebates and higher prices.
I'm assuming that the NAND is already packaged when bought at the spot price, right? Since OCZ goes through the trouble of packing their own NAND, it would have to be a decent discount off of the NAND packaged spot price. What would be a decent discount for that? 10/20/30%?
As for the controller, $15 seems a little high for an in house controller. I believe that the Sandforce controllers used to be $20 when the Vertex 3 came out. Perhaps half that values ($10) would be a a more fair estimate....I think I've seen someone on here before mention between $5-10 per controller?
Any ideas for the additional components? PCB/DRAM/transistors/resistors/Metal Case/Packaging/Acronis Software license?
I've heard that these controller platforms cost about $15 per unit, $5 for the HW (actual silicon) and $10 for the FW. If you back out the cost savings that OCZ has talked about with Everest 2 and then with BF3 it makes sense.
I wonder where he got that $15 per controller figure...
GM's are in the 40-50% range. Bottom-line, they're really good. At current Vertex 4 prices the Vector will have 30% GM. In my opinion, that's pretty good.
The same place you got that 40-50% from! :) Just kidding.
It would be nice to actually put some numbers out there to get a good estimate of what they are making on their drives. This way if we ever see the crazy low firesale prices again, we'll know were getting screwed, before OCZ blindsides us w/ another $60M loss.
same place you got it, online pricing? not to hard to find out most of these numbers, that why i said it should be around 32% at the very high-end.
this depends if they got a deal buying in spot bulk? and a zillion other things we just don't know. i sure would like to see how you are claiming 40-50%? just do the math NAND alone hits you at your lowest 40%.
(150/128 = 1.17 per GB) (1.17-.6875= 0.4825) (0.4825/1.17 = 41.23%)
DO NOTE: the above is only spot NAND of today, reflects zero other impute costs, shipping, or retail markup.