|OCZ Technology: From SSDs to Layoffs|
|Articles - Opinion & Editorials|
|Written by Olin Coles|
|Sunday, 28 October 2012|
OCZ Technology Group Fades To Black
San Jose, California-based OCZ Technology Group, Inc. Begins Layoffs As NASDAQ:OCZ Value Plummets
Once upon a time between 2004-2006, OCZ was a well-known manufacturer of high-end memory components and power supply units that sold under the motto "Founded by Enthusiasts, for Enthusiasts". During the peak economy in 2007, OCZ Technology CEO Ryan Petersen proved his devotion to enthusiasts by purchasing PC Power & Cooling (May 2007), swiftly followed by elite system-builder Hypersonic PC (October 2007). Through the years that followed, OCZ's brand name would successfully sell NVIDIA GeForce graphics cards, overclocker heatsinks, premium thermal pastes, hardcore gaming peripherals, and even a mind-controlled Neural Impulse Actuator (NIA). On March 2008, OCZ Technology revealed the industry's first consumer Solid State Drive - the apex of their dedication towards high-performance computer hardware enthusiasts. The future looked so very bright.
Then the economic collapse found its way into the enthusiast PC market, bringing with it some difficult decisions. First, OCZ cut out non-core product development, including coolers, keyboards, mice, peripheral gaming gear, computer systems, and all the other products not pertaining to memory, solid-state drives (SSDs) and power supply units. This concentrated effort began to reshape their company focus, withdrawing from enthusiast hardware and building itself into an attractive corporation that could be bought and sold on the public stock exchange. Considering the popularity of SSD technology, this could prove beneficial to their financial future.
In preparation for a NASDAQ debut, OCZ made changes. The same company that brought the Neural Impulse Actuator (NIA) to market in 2008, a product that allows gamers to control mouse input with their mind, would sell this intellectual property to BCInet. OCZ would later silently terminate their Hypersonic PC business unit, and abandoned the high-end notebook and desktop computer market completely. Alex Mei, OCZ Technology Group's Executive Vice President and Chief Marketing Officer, had this to say of the matter: "We are focusing all our resources on SSD, PSU and memory and our [system integration] business really did not fit into the spectrum of things".
Then on 24 March 2010, OCZ announced that $15.4-million had been raised from institutional investors through private transactions, which enabled them to list their stock on the OTC Bulletin Board using symbol OCZT. Initially valued at $6.25 per share on 10 February 2010, company stock value suffered a steady decline until the OTCBB stopped trading OCZT on 22 April 2010 with a final price of $4.50. All of this had happened while the relative markets were experiencing 45-day highs.
On 23 April 2010, OCZ Technology Group, Inc. began public trading on the United States NASDAQ stock exchange (NASDAQ:OCZ) with an opening price of $4.70 per share. Perhaps as a sign of things to come, during the first week of public trading on the NASDAQ stock exchange, Ryan Petersen, OCZ's Chief Executive Officer at the time, sold nearly $17,000 of personal stock as disclosed by insider trading reports. The stakes were much higher, as the global economy was stalled at its worst point in the recession, forcing OCZ to make more drastic changes to their business model. Next on the chopping block: DDR3 system memory. 2010 served as the last year OCZ Technology offered RAM to consumers, and the end of an enthusiast era.
By 2011, OCZ Technology Group, Inc. was in business to sell one thing: solid state drive products. While the power supply segment sustained enough margin to continue sales, the SSD market roared with life due to buyer incentives such as rebates and competitive price adjustments. Using their strength as a SSD-technology pioneer, OCZ would go on to purchase Korean flash-controller manufacturer Indilinx and produce their own in-house solid state drives. The effect of controlling design and manufacture of their own products, along with aggressively targeting costs, gave OCZ an advantage in the consumer storage marketplace. Investors leaped at the stock, and OCZ's share price soared to an all-time high of $10.55 on 15 July 2011.
OCZ's stock value would follow market trends throughout the first quarter, closing at $9.41 on 07 February 2012. Then the revenue warnings began, and forecasts were significantly lower than expected causing a sharp decline in valuation. Starting in June, market prices for OCZ stock closed at $4.17 before attempting a brief comeback. In August, OCZ annouced that their Chief Financial Officer, Arthur F. Knapp Jr., would retire from the company. A few weeks later OCZ would sharply reduce Q2-2013 revenue guidance and on 17 September 2012, OCZ Technology Group's Board of Directors forced the resignation of Ryan Petersen. Stock in OCZ traded at $4.46 on this day.
Nearly one month later OCZ replaced interim-CEO and Chief Marketing Officer Alex Mei with Ralph Schmitt, a member of the company's board of directors since April 2011, as the company's President and Chief Executive Officer. Stock prices plummeted, dropping shares to $1.88 at the end of trading. The worst was yet to come, as several class-action lawsuits would be announced as a reaction to OCZ Technology Group allegedly making misleading statements and misstated financial results. OCZ traded for only $1.24 on 22 October 2012, and some executives were put on notice for lay-off. As of Friday, many of the great minds behind OCZ's enthusiast movement were without work.
Reader Question: What's the best OCZ product you've ever owned?