OCZ Technology CEO Resigns, Seen as Takeover Target
OCZ Technology Group Inc. (OCZ), a maker of solid-state disk drives, is poised to become a more attractive acquisition target with the resignation yesterday of Chief Executive Officer Ryan Petersen, analysts said.
Memory chip supply shortages forced OCZ to report preliminary second-quarter sales this month that missed earlier forecasts. The fall in the San Jose, California-based company’s shares -- 38 percent this year -- could draw an acquirer looking to profit from the shift to flash memory in personal computers and video games.
Seagate Technology Plc (STX) and Micron Technology Inc. (MU) could be among potential buyers as they look to benefit from the growing flash-technology market, according to Piper Jaffray Cos. OCZ’s revenue is expected to more than double over the next two fiscal years, according to the average analyst estimate compiled by Bloomberg.
“With continued rumors that OCZ is a likely takeout candidate, we believe having the founder of the company resign removes a significant hurdle in the completion of an acquisition,” Christian Schwab, an analyst at Craig-Hallum Capital Group Ltd., wrote in a note to clients.
Petersen will be replaced on an interim basis by Chief Marketing Officer Alex Mei, the company said in a statement yesterday. Mei will retain his current duties as marketing chief and executive vice president until a permanent replacement is chosen, it said.
OCZ shares fell 7.4 percent to $4.13 at the close in New York, its lowest since Dec. 15, 2010.
OCZ makes solid-state storage drives for use in personal computers, gaming devices and mobile-phone handsets, as well as data centers and storage-area networks.
Its patent portfolio might appeal to potential buyers, said Alex Kurtz, an analyst with Sterne Agee & Leach Inc. Those factors may encourage the company to sell rather than restructure the management team, he said.
“There are some headwinds on the core business that make hitting the restart button just incrementally more difficult,” Kurtz said in a telephone interview.
Bonnie Mott, senior manager of investor relations, didn’t respond to a voice mail requesting comment that was left before the start of regular business hours.
OCZ, which has posted losses in each of the last four fiscal years, said its cash fell to $43.2 million in the quarter that ended in May from $92.3 million in the February period. OCZ is expected to report a profit in fiscal 2014, according to analyst estimates compiled by Bloomberg.
To contact the reporter on this story: Ryan Faughnder in New York at firstname.lastname@example.org
To contact the editor responsible for this story: Tom Giles at email@example.com