Qualstar: Fiscal 4Q09 Financial Results

Qualstar Corporation reported financial results for the fourth quarter of fiscal 2009 ended June 30, 2009.

Revenues for the fourth quarter of fiscal 2009 were $3.8 million, compared to $4.9 million for the same quarter of fiscal 2008, a decrease of $1.1 million or 23.3 percent. Loss from operations was $1.4 million compared to $468,000 in fiscal 2008. Net loss was $1.2 million or $(0.10) per basic and diluted share, compared to a net loss of $166,000, or $(0.01) per basic and diluted share for the fourth quarter of fiscal 2008.

Tape library segment revenues were $2.3 million for the quarter, compared to $3.7 million for the same quarter of the prior year, a decrease of $1.4 million, or 37.1 percent.
Power supply segment revenues of $1.4 million for the quarter increased by $237,000, or 19.9 percent, compared to $1.2 million in the same quarter of the prior year.

Gross profit decreased to $941,000, or 25.0 percent of net revenues, for the three months ended June 30, 2009, from $2.0 million, or 40.0 percent of net revenues, for the three months ended June 30, 2008. The decrease in gross profit is due to a decrease in revenues, an increase in scrap and inventory adjustments, and lower absorption of labor and overhead.

Research and development expenses for the fourth quarter of fiscal 2009 were $939,000, or 24.9 percent of revenues, compared to $830,000 or 16.9 percent of revenues, for the fourth quarter of fiscal 2008. The increase is due primarily to an increase in compensation related expenses, consulting fees and prototype material. Sales and marketing expenses were $640,000, or 17.0 percent of revenues, compared to $775,000 or 15.8 percent of revenues, in the corresponding period last year. The decrease in sales and marketing expense was due to a decrease in commissions, travel and entertainment and compensation related expenses, partially offset by an increase in advertising and promotion expenses. General and administrative expenses in the fourth quarter of fiscal 2009 were $745,000 or 19.8 percent of revenues, compared to $829,000, or 16.9 percent of revenues, for the same period last year. The decrease in general and administrative expense was primarily due to a decrease in bad debts and accounting and audit related expenses.

Fiscal 2009 Full Year Financial Results
Qualstar reported revenues of $17.9 million in fiscal 2009, compared with $21.5 million in fiscal 2008. The Company’s net loss in fiscal 2009 was $2.6 million or $(0.21) per basic and diluted share, compared with a net loss of $0.8 million, or $(0.06) per basic and diluted share, in fiscal 2008.

Cash, cash equivalents and marketable securities were $27.7 million at June 30, 2009, down from $32.5 million at June 30, 2008. Inventory at June 30, 2008 was $5.8 million, compared to $6.1 million at June 30, 2008.

Commenting on the fourth quarter and full-year results, Bill Gervais, president and chief executive officer of Qualstar, said: "Consolidated revenues in the quarter of $3.8 million were within our guidance range and were driven by our N2Power business and sales of our XLS enterprise class product line. For the full year, N2Power’s revenues were $5.6 million – a 38 percent improvement compared to fiscal 2008 – largely due to an increase in distribution sales for use in gaming applications and the expansion of our power supply product line. N2Power is becoming an important segment of Qualstar’s overall business and we believe its power supplies will continue to generate demand due to global energy requirements for smaller and more energy efficient power supplies."

Mr. Gervais continued: "For much of this past year, our sales were impacted by the recessionary economic climate that resulted in customers delaying purchase decisions. Despite the difficult economy in fiscal 2009, full year XLS product line sales of $1.5 million held steady compared to the prior year. We feel that the XLS is generating more interest in the overall marketplace from customers, both on the domestic and international fronts, and that this will benefit us in the coming quarters."