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OCZ Technology (OCZ) -11.1% AH after announcing it won't meet the NASDAQ's April 8 extension...

OCZ Technology (OCZ) -11.1% AH after announcing it won't meet the NASDAQ's April 8 extension date to become current with its SEC filings. Though OCZ insists it has "made substantial progress" in restating results, the company's filings for the Aug. and Nov. 2012 quarters (FQ2 and FQ3) will be further delayed. (previous)
Comments (3)
  • This is not going to end well.

     

    The company already said that revenues will be much lower than expected (e.g. 40-50%) and the losses will be substantial (e.g. negative gross margins).

     

    Before the filings for Q2, Q3 and Q4 are made, the company said they will also have to restate its financial statements for the first quarter of fiscal 2013, as well as for fiscal year 2012.

     

    What is the SEC looking at?

     

    Their focus will be on whether or not, investors were misled by the company.

     

    Consider the following copy and paste, from the company's last 10K, filed on 5/14/2012.

     

    "We record all of our product sales net of allowances for returns, product rebates, sales credits, and market development funds. We recognize revenue when there is persuasive evidence of an arrangement, product shipment by a common carrier has occurred, risk of loss has passed, the terms are fixed and collection is probable."

     

    Will the outcome of the investigation be that the company will face fines and/or penalties?

     

    One also needs to consider the potential impact of the pending class action suits, as they will take into account the monies lost based on the entirety of all misleading actions and conduct.

     

    Of note, last quarter STEC entered into a class action settlement in the amount of $35 million.

     

    The basis of this suit was that the company made misstatements and omissions that created an inflated impression of revenue growth and of conditions that supposedly ensured near and long term continuation and even acceleration of that growth.

     

    No fraud was involved and the company was able to receive an insurance settlement of $20 million, resulting in a net, out of pocket charge, of $15 million.

     

    Fortunately, given their handsome $160M cash position and no debt, payment will not put STEC in any peril.
    8 Apr 2013, 06:03 PM Reply Like
  • So sell it short smart guy. Or are you a lawyer trolling for clients?
    8 Apr 2013, 10:36 PM Reply Like
  • At least the shorts got it right (e.g. shares down more than 80% from 52 week high and 25% Y-T-D).

     

    The most important value that the short interest provides is that they are real time financial detectives and ferret out wrong doings (e.g. over statements, aggressive accounting etc.),

     

    Had Bernie Madoff been a publicly traded company, the shorts would have found him out a long time ago.

     

    All the regulators, class action attorneys do, is look backward and shift through the rubble of a lot of lost money.
    9 Apr 2013, 08:25 AM Reply Like
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