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Without any doubts, OCZ Technology Group has been one of the fastest growing high-tech companies in the recent years both financially and technologically. Numerous industry firsts, rapid revenue increases and winning world-class customers, such as Microsoft Corp., are among the main achievements of the former chief exec and his team. But there were challenges and it looks like in the recent quarter they just got big.

OCZ Technology Group on Thursday said that it began reviewing its financial results for the second quarter of fiscal 2013 (Q2 FY2013), which ended on August 30, 2012. The firm claims that Q2 FY2013 revenue will be materially lower than the September 5th preliminary revenue range of $110 to $120 million. This new revenue estimate is principally due to the impact of customer incentive programs which were discovered subsequent to the preliminary announcement during the normal close process, and which OCZ will be reporting as a material weakness in its Form 10-Q. The company also expects to report negative gross margins and a significant net loss for Q2 2013.

As it appears, the management team led by Ryan Peterson, who stepped down from his position at OCZ last month, put so significant emphasis to win market share at all costs that it implemented customer incentives that were in excess of what was normal and regular in the past. The incentives included rebate programs, price adjustments depending on the market conditions and some other factors.

Many analysts pointed out that the company has been running into a tough cash situation in the recent quarters. The manufacturer had to acquire components for its SSDs (e.g., NAND flash memory), build products and then wait weeks or even month to get the money back after its customers pay for the products. As a result of incentives program and tough situation with cash last quarter, the company even had to access its credit facility.

Going forward, the company intends to take less risks, execute better and focus on profitability. The company will not give up its efforts to boost its market share and so the incentive programs will continue to exist, but will use less aggressive approaches going forward.

Tags: OCZ, SSD, Business


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