Many people have been watching OCZ’s stock [NASDAQ:OCZ
] and witnessed the rollercoaster that has occurred. Many people panicked when so-called ‘Copperfield Research’ made scathing accusations regarding OCZ’s finances and internal workings
. While OCZ has yet to officially address all them, they have addressed some points including their projected earnings. This earnings report details their projected earnings and how closely they came to meeting them.
Yesterday, OCZ announced their calendar 1Q 2011 results translating into their fiscal 4Q 2011 which also ended their fiscal year as well. OCZ reported $64.4M in net revenue, $58.2 of which was purely from their SSD business which is a quarterly record for the SSD business. On the $64.4M in revenue, OCZ reported a GAAP loss of $9.2M and a non-GAAP net loss of $770,000. OCZ actually saw a net operating loss of $454,000 and incurred quite a bit of costs as a result of acquiring Indilinx, writing-off the NIA line, and financing which is what drove the net loss to a much larger $9.2M.
OCZ reported that they had seen an increase in their SSD business of 380% compared to the same quarter a year ago; growing to $58.2M. This figure of $58.2 was a quarter over quarter increase of 40% from the previous fiscal quarter [3Q 2011] where OCZ reported SSD revenues of $41.5M. The big news for OCZ was that they saw a huge increase in SSD revenues in EMEA, increasing 768% to $30.9M up from $3.6M in the same quarter last year. This year over year increase shows that amount of thirst for solid states in both developed and expanding markets. The same trend continued in regions like APAC which grew 610% year over year growing to $7.9M from $1.1M the same period a year ago.
Even North America, once their largest market grew by 160% to $19.4M up from $7.5 in the same quarter a year ago. This is likely due in part to the fact that in NA there are many more SSD competitors to compete with in NA and APAC. From what it looks like, OCZ is capturing market share where they can and will develop their product lines over time to compete in APAC and NA.
OCZ stated that they posted a second consecutive non-GAAP net income of $128,000 which includes $1.7M in losses attributable to their DRAM business which they have stated multiple times is being wound down into oblivion. Furthermore, CEO Ryan Petersen states that they expect to further double their manufacturing capacity in the next quarter which should mean a significant increase in capital expenditures for the next quarter. While we aren’t sure whether or not this will affect their ultimate bottom line, we believe that OCZ is slowly inching closer and closer to GAAP net income rather than loss. Hopefully the increase in NAND prices will not cut too heavily into their operating profit and keep them from getting a GAAP net income for fiscal 1Q 2012.
For the fiscal year 2011, OCZ reported $190.1M, $133.2M of which was purely SSD revenues. This is a result of a 206% increase in SSD revenues year over year. That means that SSDs accounted for 70% of 2011’s revenues, which is an increase from 30% in fiscal 2010.
Our only caution is that OCZ is still putting all of their eggs in one basket. While this is definitely a bullish strategy, we still believe that OCZ should not allow for SSDs to continue eclipsing their other business segments. There is little to no talk about other business segments, nor OCZ’s plans for their Power Supply business which is still a segment that they have not talked about much for quite some time in their earnings reports. If OCZ wants to become an SSD only company, that is certainly their own choice. But we caution them for putting all of their eggs in the SSD basket.
Currently, OCZ has closed at $7.74 down 6.75% from open on the earnings report. Even though OCZ’s earnings report was effectively in-line with expectations, investors still punished them for their report. And so continues the OCZ rollercoaster.
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