OCZ selling assets to Toshiba for $35M, shares -34.6% AH
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 filing for bankruptcy, receives asset purchase offer from Toshiba
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.
H-P sues makers of optical disk drives for price-fixing
H-P (HPQ) has sued manufacturers of optical disk drives for allegedly conspiring to fix the price of their products from 2004-2010.
The defendants, which control 90% of the market, include Toshiba (TOSBF), Samsung (SSNLF), Sony (SNE), Panasonic (PCRFY) and Philips (PHG).
The suits follows a long probe by the Department of Justice into price-fixing and bid-rigging. Hitachi-LG Data Storage (LGEIY), another of the defendants, and four of its executives have pleaded guilty to breaches of antitrust law, while the DOJ named H-P as a victim.
H-P, which purchased billions of dollars of drives, is seeking unspecified triple damages and injunctive relief.
KKR (KKR), Toshiba (TOSBF.PK) and a consortium that includes Bain Capital are reportedly expected to make it through to the final round in the auction for Panasonic's (PCRFY.OB) healthcare business, which could attract up to $1.5B.
Second-round bids are due in on Monday.
The unit's products include blood-sugar monitoring equipment, hearing aids and systems for electronic medical records.
Toshiba (TOSBF.PK) says it has no plans (translation) to build a new NAND flash manufacturing plant beyond the ¥30B ($304M) expansion of Fab 5 at its Yokkaichi, Japan facility, announced on July 2. Future expansion plans will be determined based on market trends.
Nikkei had reported Toshiba and NAND partner SanDisk (SNDK) plan to jointly invest ¥400B ($4.1B) in a brand new Yokkaichi fab.
The fab will increase the capacity of an existing Sandisk/Toshiba facility Yokkaichi, Japan by 20% from a current 450K 300mm wafers/month, and is expected to enter production in the next fiscal year (the Japanese fiscal year starts in April).
The fab will initially be used to produce chips using 16nm and 17nm processes; SanDisk and Toshiba are currently at 19nm.
Nikkei: SanDisk, Toshiba to build ¥400B ($4.1B) fab
Nikkei's report about a new NAND flash fab to be built by SanDisk (SNDK -1.1%) and Toshiba (TOSBF.PK) comes amidst growing analyst fears new capacity additions will lead the current NAND up cycle to peak, in spite of strong smartphone/tablet/SSD-related demand.
SanDisk is lower, but rival Micron (MU +3.7%) is rallying, possibly thanks to the SIA's June/Q2 sales data. The trade association estimates DRAM sales rose 22% Q/Q in Q2. Flash memory sales are believed to have risen 8.6%.
Goldman's SanDisk downgrade: firm sees supply growing, margins peaking
Goldman's James Schneider, who has cut shares to Neutral, thinks NAND flash supply could grow faster in the next few quarters than previously expected, and that margins "are likely to peak in 2H13" thanks to price pressure and slowing cost reductions.
Yesterday, Morgan Stanley asserted there is "no more upside" in the memory chip space, while predicting DRAM growth/ASPs/margins will peak in Q3.
MS observes Samsung (SSNLF.PK), Hynix, SanDisk partner Toshiba (TOSBF.PK), and Micron's Elpida and Inotera units are all set to expand capacity in response to strong smartphone, tablet, and SSD-related orders.
MS: "Most investors we met are convinced that this time it is different ... However, industries do not stay in a vacuum or steady state when faced with huge excess returns building and significant shortage heading into 2H13."
Toshiba (TOSBF.PK): Quarterly net profit of ¥23.01B (-62% Y/Y) misses by ¥33.9B. Revenue of ¥1.757T (+0.6% Y/Y). Operating profit falls 17% to ¥96.05B. Guidance: full year net profit of ¥100T (versus consensus ¥173) on revenue of ¥6.1T (consensus ¥6.3T).
More on MEMC: The Nikkei reports MEMC's SunEdison unit and Toshiba (TOSBF.PK) have landed deals to build Japanese solar plants, with SunEdison selling the power generated by the facilities. Toshiba is said to be in talks to build 4 or 5 "megasolar" plants. The Japanese government launched an aggressive solar subsidy program last year.
After declining 7% last year thanks to nosediving prices, NAND flash memory sales will grow 14% this year to $22.4B, IHS predicts. Cautious investment plans from top suppliers such as SanDisk (SNDK), Micron (MU), Samsung (SSNLF.PK), and Toshiba (TOSBF.PK) have already fueled hopes of a better pricing environment. Unsurprisingly, IHS sees smartphone, tablet, and SSD sales driving 2013 growth - the firm estimates the iPhone single-handedly accounted for 10.5% of 2012 NAND consumption, and all other smartphones 10.4%. (hard drive forecast)