On Wednesday OCZ announced that its bank accounts had been seized by one of its creditors and that the company would file for bankruptcy, but it did not commit on which of two courses of action it would take:
- To file for bankruptcy and sell itself as an ongoing business to Toshiba
- To file for bankruptcy and liquidate
If the company is sold to Toshiba the bankruptcy court will require an auction to be held to assure that the price that Toshiba pays is the best price that the company can get. This means that there is still the possibility of another company actually acquiring OCZ. Although Seagate was rumored to be interested there are certainly others who are also preparing bids.
OCZ has good technology and a loyal retail customer base, but one year ago management decided to back out of low-margin client SSDs and focus on the enterprise, which meant losing the loyal customers. The goal was to improve prices and profitability, but the strategy may have backfired.
Toshiba would benefit if it acquires OCZ since it has had a weak presence in the SSD market. OCZ would give it strong technology and a respected name in the retail market. Meanwhile, Toshiba would give OCZ a steady source of NAND supply at competitive prices. OCZ has had a difficult time maintaining a steady NAND flash supply owing to the company’s consistently-poor credit ratings.
Objective Analysis issued an Alert the day of the announcement that carefully reviews the prospective outcomes and their impacts on a number of parties. This Alert is now available to the general public on the Objective Analysis Reports page.
We will be watching over this bankruptcy, and will be keeping our clients abreast of its progress.