14 DAY TRIAL // United States memory manufacturer, OCZ, confirmed that the company is facing serious financial issues because of poor personal computer sales at its British retailer DSG. The British company is one of its major customers and poor sales through its channel had a devastating impact over the last quarter sales. The memory manufacturer is also facing a sharp drop in its shares on the London stock exchange.
OCZ's product line ranges from professional memory module to cooling solutions and PC systems, but its memory business generates about 70 percent of the total revenue. According to company spokespersons, poor sales in November and December are the result of a weak market, and its retailer DSG is to be held responsible for that.
"The retail market in the UK was horribly soft. We generate about 20 percent of sales from retailers like Dixons and (U.S.-based) Fry's Electronics", stated Chief Executive Ryan Petersen. The Russian market was also much under the company's expectations.
Dixon is a segment of the DSG International retail conglomerate that also includes PC World. Dixon spokespersons said that slow sales of computers and components during the winter holidays would impact over the full-year profits forecasts, which would send the OCZ shares 27 percent down. The new market value situates under 17 million pounds, with the company shares down 29 percent at 32.5 pence.
"Along with other vendors in the PC supply chain, OCZ has experienced a weak Christmas trading period. U.S. demand was broadly in line ... but the UK and Russia were significantly weaker than expected", Edison technology analyst, Andrew Bryant, said in a note.
OCZ is listed on London's junior market AIM, and its shares have come down about 80 percent since the reporting 2006 results. According to Ryan Petersen, the company has been affected by the decline in Dynamic Random Access Memory (DRAM) prices, which caused serious issues with its manufacturing capacity.