Toshiba Completes Acquisition of OCZ Technology

SSD and power supply manufacturer, OCZ, filed for bankruptcy following months and months of financial problems combined with uncertainty for the future of the company. Toshiba has completed the acquisition of OCZ’s Groups Assets and launched a new subsidiary.

It’s quite sad to OCZ go. The company was one of the pioneers in the consumer SSD industry. They also helped kick off the popularity of the solid-state drive and helped to ease the transition to HDDs to SSDs for many. The manufacturer rose to eminence in 2009 and 2010 due to a well-received line of products based on Indilinx and SandForce SSD controllers. The memory manufacturer also bought out praised power supply manufacturer, PC Power & Cooling and bought Indilinx shortly thereafter to start developing its own SSD controller. After even more success, OCZ started rolling out some of the most affordable PCI-express SSD cards to the mainstream consumer market.

Then, things started to not look so good for OCZ. The company was grilled by issues with its SandForce-based Vertex III SSD when controller firmware optimization problems led to a number of bricked devices. Granted, they weren’t the only company dealing with the issue, but OCZ ripped through sales charts and dominated market share the Vertex III. This was definitely the hardest hit on the company.

At the same time as the Vertex III fiasco, OCZ journeyed on an acquisition dispute. They snapped up Indilinx and assets from PLX Technology’s R&D department, Solid Data, and SANRAD. Shortly thereafter, the idea of acquiring the company floated around Seagate’s head, but the deal fell under ice in 2012. After the deal didn’t end up happening with Seagate, CEO and founder of OCZ, Ryan Petersen, resigned. Then all hell broke loose over OCZ: the SSD manufacturer stated it needed to restate its earnings going back many years prior. This was all due to accounting improprieties.

Then, late last year, problems started popping up with the just-launched OCZ Vector SSD. The company issues a firmware update in March to make amends with the problem, but largely negative reviews and reports of failures still showed up left and right. The Vertex 450, which launched over the summer, didn’t changed much for OCZ. The 450 was stricken with more and more reports of drive failures then competing products from competitors, like Corsair and Samsung.

Earlier this year, OCZ stated that it was having issues with plentiful NAND flash, obtaining lines of credit, and manufacturing products. Sales fell down to the ground, from $88.6M in 2012 to $33.5M in the second quarter of this year. This provides evidence that suppliers had placed the manufacturer on “cash and carry”. “Cash and carry” means that the company has to pay upfront for all product purchases. Even if this wasn’t the scenario, what was evident was that OCZ was having financial trouble. OCZ then took a loan with a 15% interest rate attached to the tail of it from Hercules Capital Group earlier this year, gambling that it could keep to the terms of the deal and demonstrate a sufficient growth. This didn’t end up happening, and Hercules seized OCZ’s accounts.

This provides a gargantuan problem for ordinary consumers and buyers. When “Company X” decides to buy “Company Y’s” assets in bankruptcy proceedings, this means the equipment, IP, and worker contracts. It doesn’t mean warranty service. If Toshiba had volunteered to operate OCZ as a subsidiary, the PR would, quite simply, announce that Toshiba had acquired, or bought out, OCZ. And, if the asset purchase had included a buyout of the warranty service for OCZ’s customers, the announcement would have specifically stated so. It’s still possible that OCZ and Toshiba may still work out a deal for customer support, but I don’t see it happening. OCZ will need the asset sale income in order to pay its creditors. Plus, I don’t think Toshiba will be fond of paying on behalf of a plethora of users with drives it doesn’t plan on supporting.

It’s not clear whether this asset purchase will result in OCZ products disappearing from the market or an eminent fire sale, but I foresee a bit of each. What do guys think of this whole situation? Peeved off that there may not be costumer support for current OCZ products? Be sure to let us know in the comments below!

Source: OCZ