Yesterday OCZ Technology named Ralph Schmitt its new CEO but the news was almost immediately followed by an announcement that issues with the company's customer incentive program would result in a significant loss for the second quarter that ended August 31. Reuters reports OCZ didn't go into the details, other than that the revenue for fiscal Q2 would be "materially lower" than anticipated due to unspecified problems.
Benchmark Co analyst Gary Mobley suggests the earnings shortfall was caused by pumped up incentive programs initiated by prior CEO Ryan Petersen, an attempt to gain marketshare at a significant financial cost.
OCZ's shares fell 42 percent and closed the day at $1.88.
The customer incentive programs, which include rebates and price adjustments, will continue, Schmitt said, but they have been redesigned to achieve better results.
The latest issue at OCZ follows a string of quarterly earnings below expectations, which had already helped drive down the value of its shares by two-thirds since early February.
"OCZ has turned into a train wreck, to put it succinctly," Benchmark Co analyst Gary Mobley wrote in a note.
The prior CEO tried to gain market share by boosting incentive programs and lost sight of how this would impact second-quarter revenue, Mobley said.