Reuters: Technology News: OCZ "back on track", taps more NAND suppliers

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OCZ "back on track", taps more NAND suppliers Nov 29th 2012, 12:45 By Sruthi Ramakrishnan and Sriraj Kalluvila Thu Nov 29, 2012 7:45am EST (Reuters) - Embattled solid-state hard drive maker OCZ Technology Group Inc is sourcing a critical component from multiple vendors after a supply shortage caught it off guard. "Recently we haven't had any significant NAND supply issues, mostly because we diversified ourselves to multiple suppliers. That was part of the issue before. We were overly reliant on one supplier," Ralph Schmitt, who was named CEO in October after the resignation of co-founder Ryan Petersen, said in an interview. OCZ, known for its Vertex brand, warned in September that it expected second-quarter revenue to be below its prior forecast due to a shortage of NAND chips, used for general storage and data transfer in memory cards and solid-state drives. The company later said it expected a "significant" loss in its second quarter due to issues in its customer incentive programs, and also delayed filing the results. Schmitt said a third-party review of OCZ's investigation into customer incentive programs at the heart of the expected loss had taken longer than expected, so it was unclear when the company would report its second-quarter results. "I wish I knew the answer to that question," Schmitt said, adding that the review may end by next week. OCZ said last week that it was being investigated by the Securities and Exchange Commission because of the delayed results and had received a subpoena requesting certain documents and information. The company, which said in October that it had accessed its cash facility, is in talks for additional capital, Schmitt said. "There is ongoing discussion," Schmitt said. "We've plenty of interested parties. I don't think it'll be an issue for us to get cash into the company. It's a question of what the terms look like." "CRANKING UP THE SPEED" Schmitt said OCZ had no plans to sell itself but was always open to exploring strategic alternatives. "(A) sale is a strategic alternative. But right now that's not the direction we are heading towards because we believe the valuation of the company today should be higher even if based on the pure assets of the company," Schmitt said. OCZ's shares spiked in July on reports that larger rival Seagate Technology Plc had made a takeover offer. Micron Technology Group was also said to be interested in the company. [ID:nL4E8IJ45X] Schmitt declined to comment on whether OCZ had received any offers. OCZ shares have dropped 57 percent since the company's October 10 profit warning. OCZ's plan to scrap about 150 mostly lower-end products will help it focus on higher-margin offerings, Schmitt said. "I cannot think we can compete on price," he said. "The flash guys - the Microns, the Intels, the Samsungs really are the guys that will take that market," he said. "They can have it as far as I am concerned, as there is no profit to be made there for us," said Schmitt, who joined OCZ's board following the acquisition in 2011 of the UK design team of PLX Technology Inc, where he was CEO. From now on the focus of the company, which has not made a profit in the last three quarters, will be profitability and not topline growth alone, Schmitt said. OCZ, which also competes with Fusion-io Inc, SanDisk Corp and STEC Inc, has announced plans to slash its workforce by about 28 percent. As of February 29, the company had about 700 employees. OCZ will account for charges associated with the closure of the product lines and job cuts over more than one quarter, Schmitt said. The simplification of product lines is also helping to push out older inventory. Inventory levels for the quarter ended May 31 totaled $125.8 million, up from $34.6 million a year earlier. "I'll say that we've got the train back on the track," Schmitt said, referring to an analyst's description of the company as a "train wreck." "We are cranking up the speed here, moving forward on those tracks," Schmitt said. (Reporting by Sruthi Ramakrishnan in Bangalore; Editing by Ted Kerr) Link this Share this Digg this Email Reprints

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