Qualstar: Fiscal 2Q11 Financial Results

Qualstar Corporation reported financial results for the second quarter of fiscal 2011 ended December 31, 2010.

Fiscal 2011 Second Quarter Financial Results
Revenues for the second quarter of fiscal 2011 were $4.1 million, compared to $3.6 million for the same quarter of fiscal 2010, an increase of $0.5 million or 14.2 percent. Loss from operations was $0.3 million compared to a loss from operations of $0.9 million in the second quarter of fiscal 2010. Net loss was $0.3 million or $(0.02) per basic and diluted share, compared to a net loss of $0.8 million, or $(0.07) per basic and diluted share for the second quarter of fiscal 2010.

Tape library segment revenues were $2.6 million for the second quarter, unchanged from the same quarter last year. Power supply segment revenues were $1.5 million for the quarter, compared to $1.0 million in the prior year quarter, an increase of $0.5 million, or 57.9 percent.

Gross profit increased to $1.6 million, or 39.4 percent of net revenues, for the three months ended December 31, 2010, from $1.2 million, or 33.2 percent of net revenues, for the three months ended December 31, 2009. The increase in gross profit is attributed to a change in product mix and a decrease in inventory reserves.

Research and development expenses for the second quarter of fiscal 2011 were $0.7 million, or 17.7 percent of revenues, compared to $0.8 million, or 22.5 percent of revenues, for the second quarter of fiscal 2010. The decrease is due primarily to lower compensation expenses related to headcount reductions. Sales and marketing expenses were comparable in dollars, at $0.6 million, or 14.1 percent of revenues in the second quarter of fiscal 2011, compared to $0.6 million, or 17.3 percent of revenues, in the corresponding period last year. General and administrative expenses were comparable in dollars, at $0.6 million, or 15.8 percent of revenues in the second quarter of fiscal 2011, compared to $0.6 million, or 17.9 percent of revenues, for the same period last year.

Commenting on the Company’s second quarter results, Bill Gervais, president and chief executive of Qualstar said: "Revenues of $4.1 million in the second quarter were within our expected guidance range and increased more than 14 percent on a year-over-year basis. The top line growth was driven by our XLS enterprise class libraries, which continue to generate demand with a total of 21 XLS units shipped in the quarter to a variety of end users. We have shipped as many XLS units during the first six months of fiscal 2011 as we shipped during the entire year of fiscal 2010."

Gervais continued: "Our N2Power business also enjoyed another strong quarter with revenues of $1.5 million, up nearly 58 percent compared to the same period year. Looking forward, our power supply products should continue to generate demand due to worldwide interest in more energy efficient designs."

Fiscal 2011 Six-Month Financial Results
Qualstar reported revenues of $9.3 million for the first six months of fiscal 2011, compared with $7.3 million for the first six months of fiscal 2010. The Company’s net loss for the first six months of fiscal 2011 was $0.1 million, or $(0.01) per basic and diluted share, compared with a net loss of $1.7 million, or $(0.14) per basic and diluted share, in the first six months of fiscal 2010.

Cash, cash equivalents and marketable securities were $22.8 million at December 31, 2010, compared to $24.3 million at June 30, 2010. Inventory, net of reserves, at December 31, 2010 was $5.9 million, compared to $4.8 million at June 30, 2010.