IB Net Payout Yields Model

Key On The Gross Margin Improvements At OCZ Technology

The more I review the numbers, the more the plan from OCZ Technology (OCZ) makes sense. The company reported Q4 2012 earnings last week that mostly disappointed investors as the stock plunged 14% the day after the report.

While OCZ Technology dramatically upped guidance for the current fiscal year that started in March, the Street was very disappointed that the company decided to push development expenses forward into Q4 2012 and Q1 2013. So even though the company guided to upward of $700 million in revenue from estimates down in the low $500 million range, investors appear more concerned about short-term losses.

What stunned investors was that research and development expenses jumped over 100% sequentially to $13 million, from $6.6 million in Q3 2011. Other operating expenses jumped as well, leading to a nearly 75% increase, or $14 million more. If the company had chosen to growth expenses at the same rate of revenue, it would have been very profitable.

Read the full article at Seeking Alpha.

Disclosure: Long OCZ. Please review the disclaimer page for more details. 


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