FalconStor Software, Inc.: Protecting your nest
FalconStor Software, Inc. (Nasdaq: FALC)
Melville, N.Y.
http://www.falconstor.com/
52-week low / high: $7.44 / $15.50
Shares Outstanding: 49.80 million
Market Capitalization: $652.89 million
In a time of unforeseen need, it’s always good to have backup. For some, it might come in the form of friends, family, or credit. For computer users, it might come from FalconStor Software, Inc. (Nasdaq: FALC), a developer of network storage software designed to store and protect data.
In its 2006 report, Melville, N.Y.-based FalconStor claims that data is growing at an annual pace that sometimes exceeds 60%, basing the statistic on the experience of its customers. That leaves IT departments with a headache as technicians struggle to both store and protect sensitive data and ensure it’s still readily available to insiders.
FalconStor wants to swoop in and provide relief through its disk-based backup services.
It’s had recent success, with third-quarter 2007 revenues increasing 43% to $18.5 million, from $13 million a year earlier. That helped the company lift its pro forma income to $3.9 million or $0.07 per diluted share, compared with a pro forma income of $1.2 million, or $0.02 per diluted share, during the third quarter of 2006. The numbers are before taxes and exclude stock-based compensation expenses.
Annual revenues have been rising steadily, climbing 42.9% from $28.7 million in 2004 to $41 million in 2005, before rising another 34.4% to $55.1 million in 2006. Three analysts polled by Thomson Financial are projecting 2007 revenues of $76.13 million, an increase of 38.2%.
FalconStor’s growing list of clients span the globe. In October the company said that its technology has been deployed by Swiss bank Cornèr Banca SA. The solution was delivered with the help of Sun Microsystems Inc. (Nasdaq: JAVAD), FalconStor’s partner and a provider of network computing infrastructure product and services.
The company is also cultivating a number of business initiatives to increase its footprint in China. On Oct. 25 it announced a joint venture agreement with the Institute of Computing Technology of the Chinese Academy of Science and other parties. The goal is to create a company, to be known as Tianjin Zhongke Blue Whale Information Technologies Co., Ltd., that will produce storage solutions.
Further, FalconStor reported in November that it has entered in an original equipment manufacturer (OEM) agreement with Inspur Group, the largest server manufacturer and solution provider in China.
While it’s too early to tell how these ventures will play out, investors would be wise not to lose the data on this company.
Note: FalconStor Software, Inc. (Nasdaq: FALC) is on the “Watch List” of Rising Star Stocks, a subscription investment newsletter from Business Financial Publishing, which also publishes SmallCapInvestor.com. As a Watch List company, FalconStor displays many characteristics found in successful stock winners, and is being closely monitored for possible inclusion in the Rising Star Stocks portfolio at a later date.
