OCZ Speculation for Seagate-to-Micron Rises With Slump: Real M&A
By Tara Lachapelle, Will Robinson and Nikolaj Gammeltoft - Sep 6, 2012 9:14 PM ET
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OCZ Technology Group Inc. (OCZ) has never been cheaper for an acquirer looking to profit from the shift to flash memory in personal computers and video games.
OCZ shares plunged yesterday after the San Jose, California-based maker of solid-state disk drives said fiscal second-quarter sales were lower than prior forecasts because of a shortage of memory chips used in its products. The tumble in the $294 million company’s stock to as low as $3.90 sent OCZ below its previous record low closing price relative to book value, according to data compiled by Bloomberg.
While supply constraints caused the revenue disappointment, OCZ said demand for its drives is strong and bookings are higher than expected, and analysts still project it will generate the industry’s fastest sales growth over the next two years. After the stock drop, Piper Jaffray Cos. says OCZ may be more willing to accept a deal and could attract Seagate Technology Plc (STX) or Micron Technology Inc. (MU) as they look to benefit from the growing flash-technology market. One trader bought bullish OCZ options contracts yesterday that pay off if the stock climbs to $7 or $8, and MKM Partners LLC said that could be a bet on a takeover.
“OCZ stands out as being extremely cheap on a valuation basis,” Karl Richter, senior fund manager for West Conshohocken, Pennsylvania-based AlphaOne Capital Partners LLC, which oversees more than $450 million, said in a telephone interview. “This is absolutely one of the highest unit growth areas in technology. M&A does make sense here.”
