Five days after announcing it plans to file for bankruptcy and has received an asset purchase offer from Toshiba (TOSBF), OCZ says it has "signed an asset purchase agreement" through which the Japanese conglomerate will "acquire substantially all of OCZ's assets in a chapter 11 bankruptcy proceeding for $35M." (PR)
Toshiba will gain control of OCZ's SSD ops, as well as its SSD controllers, software, and firmware. OCZ will receive debtor-in-possession financing to support its operations during the bankruptcy process.
The sale, which remains subject to bankruptcy auction proceedings and court approval, is expected to close within 60 days.
OCZ states loan provider Hercules Technology Growth Capital (previous) has taken "exclusive control" of its accounts at multiple banks, due to the SSD vendor's failure to meet operating ratios and covenants in its loan agreement. (PR)
Toshiba (TOSBF) has offered to "acquire substantially all of [OCZ's] assets in a bankruptcy proceeding." The companies have "substantially completed negotiations on an asset purchase agreement," but the deal is still subject to various conditions, including the acceptance of Toshiba's offer by a bankruptcy court.
OCZ adds that if it isn't able to reach a final deal with Toshiba, it plans to "imminently file a petition for bankruptcy and liquidate."
Shares remain halted, but will resume trading at 2:30PM ET.
After dropping 58% on Monday and Tuesday in the absence of any major news, OCZ (OCZ +21.7%) has rallied 69% over the last two days. Altogether, shares remain down 29% from their Friday close, and 42% from where they traded before OCZ's Oct. 15 FQ2 report, within which the SSD vendor disclosed it ended its August quarter with only $10.6M in cash.
This morning, OCZ unveiled its Vector 150 PC SSD line. The company asserts its use of 19nm NAND flash chips and its home-grown Barefoot 3 controller IC yields superior performance relative to prior-gen drives; reviews are generally positive. However, OCZ has carried out similar product launches in the past without seeing its shares move sharply afterwards
PC Perspectives offers a positive review for the Vector 150 line, and generally praises their performance. The Tech Report also likes what it sees, but is hesitant to recommend the products after "watching negative user reviews stack up for two generations of Barefoot drives."
Does someone know something? OCZ (OCZ -28.9%) has plunged to new 52-week lows on volume that's already nearly 6x the SSD vendor's daily average, yet no news has hit the wires to explain the move.
OCZ has been dogged by liquidity/solvency fears for some time. The company ended its August quarter with just $10.6m in cash, in spite of raising $13.1M during the quarter. It has also declined to provide November quarter guidance, citing "uncertainties in being able to procure forecasted flash amounts and credit constraints."
Seagate (STX -1.8%), Fusion-io (FIO -5.3%), and OCZ (OCZ -5.7%) have joined NetApp (previous) in selling off following EMC's (EMC -3.7%) Q3 miss.
The storage giant's mainstay Information Storage unit saw a slight Y/Y drop in product sales, as 66% growth in flash and scale-out storage sales failed to offset an 8% Y/Y drop for high-end storage, a mere 3% increase in mid-range and backup/recovery hardware, and a 6% drop for other storage products.
EMC's numbers follow a Q2 for which IDC estimated total disk storage systems sales fell 5% Y/Y, and external disk storage sales dropped 0.8%. EMC was assigned a 24.2% share of the former market (+170 bps Y/Y), and a 31.3% share of the latter (+90 bps).
EMC blames its Q3 issues on U.S. federal demand; the company isn't alone in seeing federal weakness. However, both server and storage hardware sales have been pressured by the adoption of commodity/white-label hardware (generally using cheaper hard drives) by Internet giants and cloud infrastructure providers such as Google, Facebook, and Amazon.
OCZ's official FQ2 numbers are different from the ones found in a mistakenly-filed 10-Q the company said shouldn't be relied upon, but not dramatically so. FQ2 gross margin was 4.2%, -1050 bps Q/Q thanks to flash memory procurement issues and declining PC SSD sales. Enterprise margins "remained consistent."
OCZ isn't providing FQ3 guidance due to "uncertainties in being able to procure forecasted flash amounts and credit constraints." The company says it continues to "engage with interested parties" in exploring strategic options.
Though OCZ raised $13.1M in the quarter through a private placement, its cash balance only rose to $10.6M from $5M. U.S. sales -44% Y/Y to $18.5M, EMEA -70% to $11.7M, rest of world -80% to $3.3M.
Enterprise sales accounted for roughly half of revenue, down from ~60% in FQ1 thanks to the completion of a major project by a data center customer.
OCZ (OCZ -7.1%), which has been dealing with an accounting review for a year, has finally released its FQ1 (May quarter) results. The company has also filed 10-Qs (I, II) for FQ1 and FQ2, and a 10-K for FY13 (ended Feb. '13). However, OCZ says its FQ2 10-Q was mistakenly filed by its financial printer (shades of Google and R.R. Donnelley), and shouldn't be relied upon.
OCZ had FQ1 revenue of $55.3M (-28% Y/Y), and EPS of -$0.14 (better than -$0.44 a year earlier). Thanks to a mix shift towards enterprise sales and an FQ4 inventory write-down, gross margin was 15.5%, up from 2.4% in FQ4 and -10.7% a year earlier. Opex -14% Y/Y to $19.7M.
U.S. sales rose 32% Y/Y, but international sales fell 53%.
The mistakenly-filed 10-Q indicates OCZ had FQ2 revenue of $32.9M (-63% Y/Y), and GAAP EPS of -$0.30. GAAP gross margin was reportedly a mere 3.1%, and free cash flow -$23.3M. Cash/equivalents are said to be at $10.6M at quarter's end.
OCZ says it "faced significant challenges securing flash" in the first half of FY14, and thinks flash availability/pricing was affected by the company's credit situation. This, in turn, impacted FQ2 gross margin. Also, a customer's completion of a data center project is said to have hurt sales.
The settlement puts to rest a consolidated shareholder suit tied to OCZ's accounting review. In the event the company or a portion of it is sold, it will pay an additional $6M or 4% of the proceeds (whichever is less) to plaintiffs. (PR)
It looks as if investors were worried the cash-strapped company would have to make a larger payment. Shares still -20% YTD.
OCZ (OCZ +12.7%) CEO Ralph Schmitt was scheduled to present at Deutsche's dbAccess Technology Conference at 11:50AM ET, but reportedly cancelled due to a last-minute scheduling conflict.
OCZ, currently evaluating "strategic alternatives," has seen plenty of buyout speculation in the past. Two major flash storage acquisition have been announced just in the past week (I, II), but they both involved more enterprise-focused companies.