OCZ quits DRAM business to focus on super-speedy SSDs

Vlad Savov
V. Savov|01.13.11

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Vlad Savov
January 13, 2011 1:05 AM
In this article: dram, exit, industry, memory, ocz, ram, ssd, storage
OCZ quits DRAM business to focus on super-speedy SSDs
OCZ, a company that started life a decade ago by churning out DRAM modules for enthusiasts to throw into their towering rigs, has now announced it's abandoning that market entirely. As PC Perspective points out, it's grown increasingly difficult for companies to differentiate their products when it comes to memory -- most of it just works and most of it is pretty fast -- and continually declining prices have apparently forced OCZ's hand. The San Jose-based company's new primary breadwinner will be solid state drives, which already account for a substantial proportion of revenues and look set to grow exponentially as their own prices dip a little further into the range of the affordable. It's a shame we'll no longer have that bold Z to look at when picking out memory sticks for our next self-built machine, but maybe it's all for the best. Check out an interview with an OCZ VP at the source link below.
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OCZ Technology Group Reports Fiscal 2011 Third Quarter Results

Record Revenues With SSD Revenues Up 325% Year Over Year and 105% Sequentially; Posts Positive Non-GAAP Operating Profit

SAN JOSE, Calif., Jan. 10, 2011 (GLOBE NEWSWIRE) -- OCZ Technology Group, Inc. (Nasdaq:OCZ), a leading provider of high-performance solid-state drives (SSDs) and memory modules for computing devices and systems, reports its third quarter 2011 results (Q3'11), which ended on November 30, 2010.

Net revenues in Q3'11 were a record $53.2 million, and increased 40% both on a year-over-year and sequential basis, from $38.0 million reported in Q3'10 and in Q2'11.

SSD revenues reached a record $41.5 million in Q3'11, an increase of 325% over Q3'10 SSD revenues of $9.8 million, and a 105% increase sequentially over Q2'11 SSD Revenues of $20.2 million.

In August 2010, the Company announced a strategic optimization of its memory products whereby it discontinued certain unprofitable commodity memory module products with the intent to continue only with certain high-performance memory products. However, since that time, there has been well-chronicled, continued weakness in the global DRAM markets.

Having balanced this DRAM market weakness against the capital needs of the Company's growing SSD products, the board has determined that it is in the best interests of the stockholders to accelerate plans to discontinue its remaining DRAM module products by the end of its current fiscal year of February 28, 2011. Accordingly, our DRAM products are now expected to have minimal, if any, sales in the next fiscal year and beyond.

Reporting on a GAAP basis, which includes certain items related to the accelerated discontinuation of the Company's DRAM products, the acquisition of certain intellectual property, changes in warrant derivative valuation, and other non cash charges, GAAP net loss for Q3'11 was $8.3 million, or $0.29 loss per diluted share. This compares to GAAP net loss of $1.0 million, or $0.05 loss per share in Q3'10.

Non-GAAP net loss for Q3'11 was $0.9 million, or $0.03 loss per diluted share, as compared to non-GAAP net loss for Q3'10 of $1.6 million, or $0.07 loss per share. A reconciliation between GAAP and non-GAAP information is contained in the tables below.

Financial Highlights

* SSD revenue increased 325% year-over-year, to $41.5 million in Q3'11, representing 78% of net revenue
* Positive non-GAAP operating income of $0.1 million in Q3'11 compared to a non-GAAP operating loss of $1.0 million in Q3'10
* Positive non-GAAP Adjusted EBITDA of $0.4 million in Q3'11
* Non-GAAP gross margin increased to 19.4% in Q3'11
* Accelerated the discontinuation of remaining DRAM module products
* Company raised $22 million in a private placement to several institutional stockholders priced at a premium to the then-market price

Recent Business Highlights:

* Recently began shipping Deneva Series Enterprise SSDs in mass production quantities to a new Tier 1 OEM client
* OEM SSD business continued to ramp, with numerous new client wins such as BOLData and Falcon Northwest Computer Systems, while several current clients ramped shipments of SSDs
* Recently began shipping High Speed Data Link (HSDL) enabled IBIS SSD drives in mass production quantities to select clients
* Launched the 2nd generation REVO X2 PCIe based SSD with up to 150k random write IOPS , in capacities up to 960GBs , and deployed with key high performance workstation OEMs
* Acquired certain Fibre Channel interface and DRAM based SSD controller technology from Solid Data Inc, in order to facilitate the company's move into Fibre Channel and low latency enterprise SSD Segments
* Began mass production of 2xNm based SSD for low cost applications and started sampling 2xNm based high durability SSDs for Enterprise Server and Storage applications
* Opened new SSD manufacturing facility in Taiwan, nearly quadrupling our manufacturing capacity with the addition of two new SMT lines, the first in October and the second which has just come on-line

Business Overview:

"Revenue generated from our Solid State Drive products for the third fiscal quarter more than doubled on a sequential basis," said Ryan Petersen, Chief Executive Officer of OCZ Technology. "SSD revenue accounted for 78% of our revenue and just by itself exceeds our historical quarterly revenue totals across all categories, thus reinforcing our decision to discontinue our remaining DRAM products."

Mr. Petersen concluded, "We have focused on building the OEM and enterprise segments of our business, and last month we announced a mass production order from a Tier 1 OEM for our enterprise class SSDs, reflecting the reliability, speed and total cost of ownership solid state drives provide over traditional mechanical hard drives. We believe the market opportunity for SSDs is significant, and to that end, we will continue to invest in research and development to extend our leadership position. We also plan to increase our sales and marketing efforts in order to facilitate continued revenue growth and increased market share as SSDs gain adoption in all segments."
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