Qualstar: Fiscal 4Q10 Financial Results

Qualstar Corporation reported financial results for the fourth quarter and full year of fiscal 2010 ended June 30, 2010.

Fiscal 2010 fourth quarter financial results revenues for the fourth quarter of fiscal 2010 were $4.0 million, compared to $3.8 million for the same quarter of fiscal 2009, an increase of $0.2 million or 5.9 percent. Loss from operations was $627,000 compared to $1.4 million in the fourth quarter of fiscal 2009. Net loss was $575,000 or $(0.05) per basic and diluted share, compared to a net loss of $1.2 million, or $(0.10) per basic and diluted share for the fourth quarter of fiscal 2009.

Tape library segment revenues were $2.3 million for the fourth quarter, comparable to the prior year quarter. Power supply segment revenues were $1.7 million for the quarter, compared to $1.4 million in the prior year quarter, an increase of $0.3 million, or 20.9 percent.

Gross profit increased to $1.28 million, or 32.1 percent of net revenues, for the three months ended June 30, 2010, from $941,000, or 25.0 percent of net revenues, for the three months ended June 30, 2009. The increase in gross profit is attributed to a change in product mix and a decrease in reserves.

Research and development expenses for the fourth quarter of fiscal 2010 were $749,000, or 18.8 percent of revenues, compared to $939,000 or 24.9 percent of revenues, for the fourth quarter of fiscal 2009. The change is due primarily to decreases in R&D material, consultants and compensation related to headcount reductions. Sales and marketing expenses were $528,000, or 13.2 percent of revenues, compared to $640,000 or 17.0 percent of revenues, in the corresponding period last year. The change in sales and marketing expense was due to decreases in advertising and promotion expenses. General and administrative expenses in the fourth quarter of fiscal 2010 were $631,000 or 15.8 percent of revenues, compared to $745,000, or 19.8 percent of revenues, for the same period last year. The change in general and administrative expense was primarily due to decreases in accounting and audit and compensation related to headcount reductions.

Commenting on the Company’s business results, Bill Gervais, president and chief executive of Qualstar said: "Consolidated fourth quarter revenues of $4.0 million increased 5.9 percent compared to the fourth quarter last year driven by the continued growth in sales of our XLS enterprise class product line and our N2Power business. In fact, the XLS product line generated strong momentum throughout fiscal 2010 with sales increasing nearly 64 percent for the full year. XLS libraries appeal to a diverse array of end users as the flexibility of our solution allows customers to easily expand their data storage capacity as requirements increase over time. N2Power’s full year revenues increased to a record $5.8 million and our products continue to generate strong demand due to worldwide requirements for smaller and more energy efficient power supplies."

Mr. Gervais continued: "Looking ahead, we hope that improving customer demand combined with new product development initiatives will result in a positive impact in fiscal 2011."

For fiscal 2010 full year, Qualstar reported revenues of $15.3 million in fiscal 2010, compared with $17.9 million in fiscal 2009. The Company’s net loss in fiscal 2010 was $3.1 million or $(0.25) per basic and diluted share, compared with a net loss in fiscal 2009 of $2.6 million, or $(0.21) per basic and diluted share.

Cash, cash equivalents and marketable securities were $24.3 million at June 30, 2010, down from $27.7 million at June 30, 2009. Inventory, net of reserves, at June 30, 2010 was $4.8 million, compared to $5.8 million at June 30, 2009.