Qualstar: Fiscal 4Q08 Financial Results

Qualstar Corporation reported
financial results four its fourth quarter and fiscal year ended June
30, 2008.

For the year, Qualstar reported revenues of $21.5 million, an increase of 4.1 percent compared with $20.6 million in fiscal 2007. The Company’s net loss for fiscal 2008 was $753,000 or $(0.06) per basic and diluted share, compared with a net loss of $1.4 million or $(0.12) per basic and diluted share, in the prior year.

Commenting on the full year results, Bill Gervais, president and chief executive officer of Qualstar said: "Overall, I am encouraged by Qualstar’s operating performance in fiscal 2008. For the full year, revenues showed a slight increase of 4.1 percent compared to fiscal 2007."

"In addition, I was also pleased with our ability to improve operating efficiencies and manage expenses. Our gross margin percentage increased to 34.6 percent from 31.6 percent, a 300 basis point improvement over the prior fiscal year. We also made progress during the year towards our goal of returning the company to profitability. Full year net loss of $(0.06) per share was an improvement over the prior year’s net loss of $(0.12) per share. Additionally, during the year we announced a quarterly cash dividend, which we believe reflects our confidence in the Company’s long-term business fundamentals."

Mr. Gervais concluded; "Our fiscal 2008 results were aided by good growth in our N2Power business. For the year, N2Power generated record revenues of $4.0 million, a 34 percent improvement compared to $3.0 million in fiscal 2007. We believe that N2Power products should continue to generate increasing revenues due to worldwide requirements for more efficient electronic devices."

Fiscal 2008 Fourth Quarter Financial Results
Revenues in the fourth quarter of fiscal 2008 were $4.9 million, compared to $5.8 million for the same quarter of fiscal 2007, a decrease of $874,000. Loss from operations in the quarter was $468,000 compared to $186,000 in the fourth quarter of fiscal 2007. Net loss was $166,000, or $(0.01) per basic and diluted share, compared to net income of $245,000, or $0.02 per basic and diluted share for the fourth quarter of fiscal 2007.

Tape library segment revenues were $3.7 million, compared to $5.2 million in the same quarter of the prior year, a decrease of $1.5 million. Power supply segment revenues increased more than 100 percent to $1.2 million in the quarter from $560,000 for the same quarter of the prior year.

Gross margin percentage in the fiscal 2008 fourth quarter was 40.0 percent, compared to 38.8 percent in the year-ago quarter. The increase in gross margin percentage was primarily attributable to efficiencies achieved in material and manufacturing labor management.

Research and development expenses for the fourth quarter of fiscal 2008 were $830,000, or 16.9 percent of revenues, compared to $784,000 or 13.5 percent of revenues, for the fourth quarter of fiscal 2007. Sales and marketing expenses were $775,000, or 15.8 percent of revenues, compared to $800,000 or 13.8 percent of revenues, in the corresponding period last year. General and administrative expenses in the fourth quarter of fiscal 2008 were $829,000 or 16.9 percent of revenues, compared to $848,000, or 14.7 percent of revenues, for the same period last year.

Cash, cash equivalents and marketable securities were $32.5 million at June 30, 2008, down slightly from $33.3 million as of June 30, 2007. Inventory at June 30, 2008 was $6.1 million, compared to $5.9 million as of June 30, 2007.

Subsequent to the end of the quarter, N2Power was awarded purchase orders from an OEM customer for a new series of 220-watt through 260-watt power supplies totaling approximately $1.35 million to be delivered over a nine month period. This is the largest single order N2Power has received to date. The power supplies will be used in gaming applications. Shipments have begun.