Qualstar: Fiscal 3Q16 Financial Results

Srorage down 3% and not profitable
This is a Press Release edited by on 2016.11.14

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(in $ million) 3Q15 3Q16 9 mo. 16 9 mo. 16
Revenues 2.3 2.7 8.4 7.2
Growth   15%   -14%
Net income (loss) (1.5) (0) (2.2) (0.8)

Qualstar Corporation announced its financial results for the third fiscal quarter ended September 30, 2016.

Revenue in the third quarter of 2016 increased 15.1% to $2,666 from $2,317 in the same period a year ago. For the first nine months, revenue decreased 14.2% to $7,186 from $8,371 in the comparable nine-month period of 2015.

Gross margin increased to 28.5% in the third quarter of 2016 from (1.5)% in the same period last year. For the first nine months, gross margin improved to 30.4%, versus 24.0% in the first three quarters of 2015.

In the third quarter of 2016, net loss totaled $53 or $(0.03) per basic and diluted share, compared to net loss of $1,456 or $(0.71) per basic and diluted share in the same period last year. For the first nine months, net loss was $803 or $(0.39) per basic and diluted share, compared to a net loss of $2,197 or $(1.08) per basic and diluted share in the comparable period in 2015.

At September 30, 2016 the cash balance increased to $3,651 from $3,504 at June 30, 2016, a positive cash flow of $147 for the three months ended September 30, 2016, and the company had no debt.

"We are encouraged by our financial results and excited about future prospects," stated Steven N. Bronson, CEO and president. "The expansion and revamping of our product line and investment in key aspects of the business have allowed us to build a stronger foundation which in turn has enabled us to be competitive. Additionally, the prudent financial controls that have been implemented during the last few years are delivering improved financial margins reinforcing the success of our turnaround strategy. We are also continuing to explore external opportunities to accelerate our top and bottom line numbers."

Our Comments

Comment from Qualstar on storage: "The decrease in revenues is attributed to the changing data storage market dynamics. With the release of LTO-7, the capacity of tape libraries increases by 58%. The company has seen a shift in sales to smaller libraries, therefore, reducing revenue. Also, the overall SMB market for tape libraries is declining due to competition from the cloud. Small business owners are reducing or eliminating their IT departments and eliminating onsite data storage systems and the service contracts that went with them."

For storage only
(in $ thousand)
3Q15 3Q16 Q/Q Growth 6mo. 15 6mo. 16 6mo. Growth
Product 669 652 -3% 2,322 1,633 -30%
Service 477 455 -5% 1,499 1,390 -7%
Total storage revenue 1,146 1,107 -3% 3,821 3,023 -21%
Loss before taxes (1,167) (20)   (1,599) (312)