FalconStor woes continue with quarterly loss

FalconStor Software executive vice president Bernard J. Wu

FalconStor Software executive vice president Bernard J. Wu has resigned from the struggling Melville data-storage company effective Friday, according to a regulatory filing. He has worked at FalconStor since 2000. (Nov. 8, 2011) Photo Credit: Steve Pfost

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FalconStor Software Inc., a Melville data-storage company that has struggled since settling bribery charges last year with federal authorities, said Thursday its first-quarter profits sank sharply as economic woes in Europe and tensions on the Korean Peninsula sowed uncertainty amid its overseas customers.

The company said sales fell 21 percent, to $15.3 million, in the three months through March, compared with the same period last year. FalconStor reported a loss of $4.4 million, or 99 cents per share.

FalconStor president and chief executive Jim McNeil said he was "disappointed" in the performance.

The company, founded in 1994, has been operating at a deficit for each of the past four years, losing $13.7 million in 2012. Revenue has fallen four the last five quarters.

FalconStor has attributed the falling sales to the sluggish economies in Asia and Europe, where many of its customers are based. The company has about 430 employees and offices in more than a dozen countries, including France, Germany, China, Taiwan and South Korea.

FalconStor's troubles have extended beyond its sagging bottom line.

In June the company paid $5.8 million to the Security and Exchange Commission to settle charges that the former chief executive, ReiJane Huai, and two former salesmen had paid more than $300,000 in bribes to JPMorgan Chase & Co. to win contracts.

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Huai committed suicide in September 2011 the day before he was scheduled to plead guilty in court.

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