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FalconStor reports lower 2Q earnings, layoffs

Melville-based FalconStor Software, a data storage company, reported

Melville-based FalconStor Software, a data storage company, reported lower second-quarter profits Tuesday. Credit: Steve Pfost, 2011

FalconStor Software, a data storage company based in Melville, reported lower second-quarter profits Tuesday due to weakening business overseas, and said it had laid off employees.

The company earned $16.5 million last quarter, a nearly 16 percent decrease from $19.6 million in profits the company generated in the same period last year.

FalconStor blamed global economic turmoil for its poor earnings, as its overseas business -- where the company derives a majority of revenue -- suffered from a slowdown in Asia and the eurozone crisis.

As a result of the negative economic outlook overseas, FalconStor also announced it had laid off 7 percent of its workforce in an effort to cut costs. The company had 468 employees as of December. The layoffs occurred sometime after June 30, and FalconStor did not specify whether employees in its Melville headquarters were affected. The Melville office is the company's only location in the United States. It also operates offices in Asia, Europe and Australia.

Last quarter, the Securities and Exchange Commission ended an investigation that had marred FalconStor's public image for over two years. The company paid $5.8 million to the SEC in June to settle charges that the former chief executive, ReiJane Huai, and two former salesmen at the company had paid more than $300,000 in bribes to JPMorgan Chase & Co. to win contracts. Huai committed suicide last September, a day before he was to plead guilty in court, a police source told Newsday at the time.

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