The past couple of months proved to be a very trying experience for the solid state storage industry. According to confidential sources, players such as Texas Memory System and OCZ Technology are looking to be acquired, STEC’s long run of allegedly corrupt management peaked with the SEC investigation against company leaders. At the same time, members of the core engineer team left for companies like Western Digital Corporation and SMART Storage Systems.
Coming back to the company that probably has the most turbulent ride on financial markets, back in April 2012 we learned that OCZ Technology "recently hired a company to engage in consulting on potential acquisition partners". While the complete timeline was not disclosed to us, we had known for a while that the senior management of the company would like to pursue other interests. Bear in mind, OCZ was forced to quit projects such as the Brain Computer Interface (OCZ NIA) by the investors that did not understand the potential of the technology.
The story died down for several weeks, until my former colleague Fuad "Fudo" Abazovic ran a story on his site. We spoke with our sources and received information that OCZ was in the final stages with the deal about to be announced. Given the validity of sources (BSN* was first to report that Seagate privatization negotiations failed, weeks ahead of the official admittance), it looked that the company completed its run and that the matter of acquisition is just the matter of time.
Furthermore, according to the sources in the know, the negotiations came to the point of drafting a press release, which should be considered as the final step. However, we’ve seen a lot of examples when the acquisition did not went through even though a public announcement was ready to be released. Good examples of this are Lufthansa’s acquisition of SAS in 2008 (was supposed to happen on the same day as the collapse of Lehman Brothers, house that was brokering the deal) and Sony’s acquisition of Apple Computer Inc. in 1997, just few weeks before Board of Directors made a Hail Mary pass and brought Steve Jobs back.
In the case of the rumored acquisition of OCZ Technology, there are moves to ensure the future of the company, and the sequence of events leads to two probable outcomes – acquisition, or growing into a multi-billion dollar company. Furthermore, last week saw an announcement of the upcoming retirement for a 63-year old Arthur "Art" F. Knapp Jr., OCZ’s Chief Financial Officer. While Art will continue to serve as the CFO until the arrival of his replacement, we read stories and rumors that the retirement was sudden, immediate, and other highly emotional statements – without even reading the press release in question.
In any case, we’ll closely follow what is going on with the company, especially in the light of today’s Annual Shareholder Day, which will – no doubt about it -be filled with questions from company investors. What the future brings for OCZ or Seagate, remains to be seen.
Are the negotiations over? Based on our sources, there will be plenty of virtual ink spilled about both companies, especially as Seagate is trying to recover from the recent brain drain. For those not paying attention, the company changed its headquarters from Scotts Valley to Cupertino, becoming "yet another Silicon Valley company". For people that built their lives around Santa Cruz and Monterey area, the idea of a multi-hour daily commute became unacceptable.
The industry is steadily heading towards consolidation, as the amount of players in the Solid State industry is continuously reducing, with Far Eastern vendors not being able to follow the pace set by the western companies.