OCZ Technology Group: We Are Back on Track.

OCZ Shares Preliminary Restructuring Results

[11/29/2012 09:57 PM]
by Anton Shilov

The new chief executive officer of OCZ Technology Group said the company is back on the right track, but it will take some time before the new strategy starts to bring in fruits. The SSD maker ceased to rely on sole supplier of NAND flash memory, reduced its workforce substantially and decided to change strategy to avoid direct competition against its bigger rivals with own memory manufacturing capacities.

"I'll say that we have got the train back on the track. We are cranking up the speed here, moving forward on those tracks," said Ralph Schmitt, chief executive officer of OCZ Technology, in an interview with Reuters news-agency.

The recent issues with OCZ happened partly because the company was actively pursuing expansion of market share, competing fiercely not only against other independent suppliers of solid-state drives, but also against manufacturers with own NAND flash manufacturing capacities. Additionally, in a bid to boost market share, OCZ had multiple customer incentive programs in place. Moreover, OCZ only acquired actual NAND flash memory solely from Micron Technology, hence when the latter started to limit production capacities to stabilize pricing, OCZ ran into shortages.

Since mid-October, OCZ discontinued around 150 product variations, including reduction the value category by approximately 80%, which was necessary to streamline OCZ's product offerings to address the mainstream and higher-end consumer products, as well as enterprise and OEM solutions. From now on, OCZ will cease to fight only for market share, but will concentrate on profitability.

“I cannot think we can compete on price [with bigger SSD makers who have NAND flash manufacturing in-house]. The flash guys – the Microns, the Intels, the Samsungs – really are the guys that will take that market. They can have it as far as I am concerned, as there is no profit to be made there for us," said Mr. Schmitt.

In addition, OCZ ceased to exclusively buy NAND flash from Micron and currently has multiple suppliers, which may guarantee there will be no shortages.

“Recently we have not 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,” explained the new chief executive officer of OCZ.

Even though the maker of solid-state drives still cannot say when it plans to publish its financial results for the second quarter of fiscal 2013, it claims that there will be no problems to get additional money to fund the operations.

“There is ongoing discussion. We have plenty of interested parties. I do not think it will be an issue for us to get cash into the company. It is a question of what the terms look like,” said Mr. Schmitt.