Qualstar: Fiscal 1Q09 Financial Results

Qualstar Corporation reported financial results for the first quarter of fiscal 2009 ended September 30, 2008.

Revenues for the first quarter of fiscal 2009 were $5.4 million, compared to $5.3 million for the same quarter of fiscal 2008, an increase of $70,000 or 1.3 percent. Loss from operations was $321,000 compared to $602,000 in fiscal 2008. Net loss was $39,000, or $(0.00) per basic and diluted share, compared to a net loss of $206,000, or $(0.02) per basic and diluted share for the first quarter of fiscal 2008.

Tape library segment revenues were $3.8 million for the quarter, compared to $4.6 million for the same quarter of the prior year, a decrease of $819,000. Power supply segment revenues increased 122.8 percent, or $889,000, to $1.6 million for the quarter from $724,000 for the same quarter of the prior year.

Gross margin percentage in the fiscal 2009 first quarter was 34.9 percent, compared to 30.5 percent in the year-ago quarter. The increase in gross margin percentage was primarily attributable to efficiencies achieved in material and labor management.

Research and development expenses for the first quarter of fiscal 2009 were $743,000, or 13.8 percent of revenues, compared to $728,000 or 13.7 percent of revenues, for the first quarter of fiscal 2008. Sales and marketing expenses were $695,000, or 12.9 percent of revenues, compared to $759,000 or 14.2 percent of revenues, in the corresponding period last year. General and administrative expenses in the first quarter of fiscal 2009 were $766,000 or 14.2 percent of revenues, compared to $739,000, or 13.9 percent of revenues, for the same period last year.

Cash, cash equivalents and marketable securities were $31.1 million at September 30, 2008, down from $32.5 million at June 30, 2008. Inventory at September 30, 2008 was $6.2 million, compared to $6.1 million at June 30, 2008.

Commenting on the first quarter results, Bill Gervais, president and chief executive officer of Qualstar, said: "First quarter results were solid and revenues of $5.4 million exceeded our guidance range. I continue to be pleased with our operating execution–especially by our ability to improve operating efficiencies and manage expenses. We continue to make excellent progress towards our goal of returning Qualstar to profitability. First quarter gross margin of nearly 35 percent coupled with the lowest quarterly total operating expenses in several years resulted in a significant improvement at the bottom line."

Mr. Gervais concluded: "Our better than expected results were driven by the strength of our N2Power business. During the first quarter, N2Power generated record revenues of $1.6 million–a 123 percent improvement compared to the same period last year–largely due to power supply shipments to an OEM customer for use in gaming applications. N2Power is growing in importance as part of Qualstar’s overall business and we believe N2Power products will continue to generate strong demand due to worldwide requirements for smaller and more energy efficient power supplies."