Seeking Alpha

Stan Piland

 
View as an RSS Feed
View Stan Piland's Comments BY TICKER:
Latest  |  Highest rated
  • OCZ - A Problem Of Too Much Demand [View article]
    Willl-burrr!!! Glad I'm not short this stock.
    Sep 17, 2012. 04:22 PM | Likes Like |Link to Comment
  • OCZ - A Problem Of Too Much Demand [View article]
    This is the "Events" section of the OCZ investor relations page. The DB conference appears under Past Events; simply click Webcast and register.
    http://bit.ly/PmT5t7
    Sep 13, 2012. 02:09 PM | Likes Like |Link to Comment
  • OCZ - A Problem Of Too Much Demand [View article]
    Petersen's Q&A at the DB conference was awesome. Presentation started a little slow, but came alive when people started asking questions. This supply disruption will be little more than a rounding error once we see (1) SAN Replacement, and (2) migration to 20 nm. He hasn't released a bookings number because it's so high that it would "lack credibility" in light of recent guidance. Emphatically do not need to raise capital. I would seriously not like being short OCZ when they release eps details on Oct 3.
    Sep 13, 2012. 01:07 PM | Likes Like |Link to Comment
  • OCZ - A Problem Of Too Much Demand [View article]
    I have viewed accelerating revenues from the SAN Replacement business (Z-Drive R4, etc.) as the major 2H2013 catalyst for OCZ. As I have noted, these sales have not been incorporated into guidance or street estimates. Obviously I am disappointed by the 2Q sales miss, but but it does not change my view that this enterprise opportunity will drive significant sales growth and multiple expansion.

    At this point, I think the stock will be dead money until (1) they quantify the eps and cash flow impact from the supply disruptions, and (2) incorporate SAN Replacement and Barefoot 3 revs and profits into guidance. I do not think F2013 guidance will be reduced on Oct 3, and it may even go up.

    I think a buyout is not a high probability in the near-term. But the potential for a buyout represents a sort of "put option" for investors. If OCZ management cannot deliver profitable growth, then the company's superior IP would likely attract multiple bidders, including STX, WDC, MU, and perhaps more. So I am still a buyer...frustrating stock though.
    Sep 10, 2012. 01:18 PM | 2 Likes Like |Link to Comment
  • OCZ Technology: Another Supply Warning As Demand Surges [View article]
    Although supply issues are disappointing, I continue to think SAN Replacement revenues could total several hundred million in the second half of F2013. Importantly, this business is not affected by shortages in commodity-grade MLC NAND. Management emphasized that they were not withdrawing guidance for F2013, even as 2Q and 3Q HDD replacement sales are below estimates. I actually think they will raise F2013 guidance, but maybe not until they resolve the supply issues.
    Sep 7, 2012. 11:21 AM | 1 Like Like |Link to Comment
  • Seagate Wants To Buy A Solid State Maker: Will It Be Fusion-Io, Ocz Technology Or Stec? [View article]
    I think you should double your short bet dude. But I think everyone else will do better on the long side.
    Sep 7, 2012. 09:31 AM | Likes Like |Link to Comment
  • Seagate Wants To Buy A Solid State Maker: Will It Be Fusion-Io, Ocz Technology Or Stec? [View article]
    I specifically asked management about that review; they indicated they frequently had to correct technical errors in reports. It is the only review I have seen which made that assertion. But they have explicitly stated the Z-Drive R4 uses enterprise grade, and they don't have a supply issue there.

    Regarding Micron, I think his use of the term "perfect storm" is pretty descriptive. He was also explicitly stated that allocations to their own SSD business had been cut back more than external customers.

    The stock is trading way below 50% of revs, and they're growing 45% in a bad quarter. I think SAN Replacement revs are going to be several hundred million bucks in the second half, driven primarily by 50%-plus GM Z-Drive R4 sales.
    Sep 6, 2012. 08:17 PM | 1 Like Like |Link to Comment
  • Seagate Wants To Buy A Solid State Maker: Will It Be Fusion-Io, Ocz Technology Or Stec? [View article]
    pipster, the attached link might help you understand more about the difference between enterprise-grade and commodity-grade MLC NAND. The two are not only different, but each differs by provider. An unappreciated fact of the business is that a design which works with one provider's MLC NAND does not necessarily work (to spec) with MLC NAND from a different provider. http://bit.ly/OYCqvM

    Further, asynchronous NAND (Agility 4) and synchronous NAND (Vertex 4) both use a 25nm die package size, but have different cost, performance, reliability and endurance characteristics.

    The Z-Drive R4 uses enterprise-grade , higher P/E cycle MLC NAND which results in higher endurance and longer life. The company has explicitly stated that enterprise products are not affected by the shortage.

    Micron confirmed today at the Citi conference that 25nm MLC NAND shortages are an industry problem, not specific to OCZ. In fact he described it as a "perfect storm" of rising demand in the face of production cuts. He further indicated that MU had cut back their internal SSD business more than they had cut back external customers.

    It's nice for you that your short is working, but your knowledge of the business suggests that's more luck than good analysis. There is no support for your allegation that management is lying to investors.
    Sep 6, 2012. 06:09 PM | Likes Like |Link to Comment
  • OCZ Technology Warns On NAND Shortage: What's Next? [View article]
    fyi...Micron speaking at the Citi conference just confirmed that supply constraint for 25nm MLC NAND is an industry issue...not just OCZ. All suppliers cut production earlier in the year in the face of weak pricing (as Hard Drives recovered from floods last year.) At the same time demand growth has strengthened considerably. It appears AAPL suddenly gobbled up all available supply about 3-4 weeks ago in anticipation of its upcoming launch. Micron says it cut its own internal drive business more than it cut external sales.

    OCZ's advantage is that they are ahead of everyone in the migration to 19/20 nm NAND, so will likely pick up market share. But what everyone is forgetting is that SAN Replacement revs are not included in F2013 estimates. So analyst estimate reductions are worthless! I still think F2013 has to be revised upward to reflect Z-Drive R4 sales, etc., in spite of Vertex 4 and Agility 4 supply issues.
    Sep 6, 2012. 03:59 PM | Likes Like |Link to Comment
  • Seagate Wants To Buy A Solid State Maker: Will It Be Fusion-Io, Ocz Technology Or Stec? [View article]
    Read my post again: July 31,2014, per the 8-k.
    Aug 29, 2012. 12:07 PM | Likes Like |Link to Comment
  • Seagate Wants To Buy A Solid State Maker: Will It Be Fusion-Io, Ocz Technology Or Stec? [View article]
    This is from the 8-K filed Aug 7:

    "...under the terms of the Separation Agreement, stock options held by Mr. Knapp as of July 31, 2012 will continue to vest until the Termination Date, and Mr. Knapp may exercise any vested and unexpired stock options until July 31, 2014. As of July 31, 2012, Mr. Knapp had a total of 162,611 vested and exercisable stock options. The Separation Agreement contains other customary provisions for agreements of this nature."

    Art is a good CFO, but his retirement is not material to the company's future. OCZ has a gigantic short position. And if you follow the company for a while, you will find no shortage of bears with inane allegations and reasons the company will soon fail. I have followed them for a year and a half, and I think their execution in this fast-growing but competitive business has been spectacular.

    The SSD business has entered what I call the "parabolic growth" phase; it is one of the only segments of technology which is likely to power through an economic slowdown (and possible contraction) in C2013. OCZ will likely be profitable...maybe very profitable...in the second half of F2013. Once they become profitable, it will become very, very difficult for institutional small-cap growth managers not to own the stock...particularly at a .5X EV/Rev multiple on current year sales guidance.

    If OCZ gets traction with the Z-Drive R4 (MSFT and others have already qualified) and the VXL software, then revs should exceed $900 mil this year (vs $630-$700 mil guidance), and perhaps $1.5 bil next. If that happens, the stock will be moonshot. I am exceedingly comfortable owning this stock, and I am not enthusiastic about a buyout at this time and price.
    Aug 29, 2012. 11:33 AM | Likes Like |Link to Comment
  • Seagate Wants To Buy A Solid State Maker: Will It Be Fusion-Io, Ocz Technology Or Stec? [View article]
    I have covered this stock for a year and a half. In that time they have consistently met or beaten sales targets. GM has consistently expanded. They have consistently introduced cutting-edge products. OCZ has the broadest product portfolio, the biggest sales volume, their own proprietary controller technology, their own Flash Translation Layer, and their own Adaptive DSP technology. They have been among the first to market in almost everything they do. And most important, the investments have already been made.

    The only disappointment was postponing profitability to invest in a massive new business...which I think looks pretty good. But the valuation has been compressed by clowns who constantly find reasons why the company will soon fail.

    Well they haven't failed yet, and I expect that by mid-fall, the stock price will begin to reflect their strong operating momentum.
    Aug 27, 2012. 12:56 PM | 1 Like Like |Link to Comment
  • Seagate Wants To Buy A Solid State Maker: Will It Be Fusion-Io, Ocz Technology Or Stec? [View article]
    Nice article. I would add a couple of points. Petersen has repeatedly stated that their entire business model depends on declining prices, because lower prices enable SSDs to compete more effectively with HDDs. To this end, they spent a fair amount of money developing an internal wafer processing capability,which should add around 400 bps to the gross margin.

    The consumer business is becoming more standardized (but not yet commoditized), and OCZ is at the front of the pack...Vertex 4 is an awesome product and a top seller. They are ahead of everyone with TLC NAND-based drives, which should be launching soon.

    The real action is in enterprise SSDs, and again OCZ is near the front of the pack. Their Z-Drive R4 PCIe has had some of the best reviews in the industry and sports a 50%-plus GM. Their VXL cache and virtualization software has been qualified with VMWare and should enable OCZ to compete effectively with FIO in the nascent SAN Replacement market.

    Finally regarding growth, the reason this stock is so cheap is that they ramped Sales & Marketing, R&D and Inventories to support the SAN Replacement business, but they haven't incorporated it into their guidance. So you can't reconcile expenses and cash burn with expected revs. The Z-Drive R4 has been in numerous qualification trials for a year, and all evidence suggests it is doing well. I expect MSFT and others could contibute several hundred million over the next few quarters, but again, those revs are not included in the $630-$700 mil guidance. So I expect F2013 will actually see revs over $900 mil and eps of around $.60 per share. My model suggests the do NOT need additional financing to support these revs.

    Finally, regarding valuation, I have communicated to management that I would vote "No" against any deal below $1.5 bil or $21 per share. Why would I want to sell now, right before they reap the benefits of all that investment? So I agree a deal with STX makes a lot of sense, but I expect a quarter or two of profitability before a deal actually happens. And I expect significantly higher stock price with or without any deal.
    Aug 27, 2012. 12:20 PM | Likes Like |Link to Comment
  • Are Molycorp Shares Worth Buying On The Recent Plunge? [View article]
    Xinhua reported today that China is imposing minimum production levels for rare earth elements producers. The threshold could lead to 20% production cuts. A senior Chinese ministry official said about one-third of rare earth mining operators and nearly half of the smelting and metallurgy businesses in China will be unable to meet the new criteria. This would seem likely to renew concerns about REE availability, and will likely boost pricing. MCP is deeply oversold and could rally at least 40-50% near term. I have little concern about MCP's ability to obtain additional financing. Bot some today and will likely add tomorrow.
    Aug 7, 2012. 06:12 PM | 2 Likes Like |Link to Comment
  • Mitek One Billion Potential Users By 2014 And 33% Of The Float Short [View article]
    Can you explain why you think TISA has a better RDC product? So far, no one has seen it. Also, systems integration to launch mobile deposit takes 6-12 months, at significant cost to the bank...pretty sticky business. Why do you think banks which have already absorbed these costs would choose to incur additional switching costs? Finally, are you suggesting that TISA and Kofax have mobile photo bill payment technology currently? I don't know about Kofax, but TISA has made no such announcement. MITK is the leader in this space; the rest are distant laggards.
    Aug 3, 2012. 11:51 AM | 1 Like Like |Link to Comment
COMMENTS STATS
163 Comments
102 Likes