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FalconStor may have morale problem

Staff turnover normal business events says management

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The Reg' has been told by reputable people familiar with FalconStor that staff are leaving and both morale and confidence in senior management is very low. FalconStor says nothing untoward is happening at all and that it's successfully refocussing the company towards increased sales of branded products through the channel.

FalconStor's results for its most recent quarter, which ended on June30, showed revenues of $20.3m, an 18 per cent rise over the previous quarter but down 17 per cent year-on-year. The net loss was $3.4m, which was better than the previous quarter's $5.5m loss.

A person familiar with FalconStor's situation in the USA paints a picture of morale being very low, confidence in senior management equally low, and lots of people, including top talent in the field, looking to go to other jobs.

A source said it appears there has been a restructuring in marketing, to do with the increased focus on branded sales through the channel and that may have precipitated some staff changes. We understand that a senior storage architect has resigned in the Colorado area, that a sales engineer has left the Denver office to join EMC, and Greg Doherty, a Florida-based account manager left to join Fusion-io.

FalconStor, which supplies storage virtualisation and data protection software, has been having some successes recently. HDS signed a reseller deal for its virtual tape library and deduplication software in June. Fadi Albatal, VP and senior director of marketing for the company, says that channel sales are up 20 per cent quarter on quarter, and there has been a 51 per cent rise in non-OEM branded product revenue since the second quarter of 2009. FalconStor has also increased its Asia-Pacific region sales by 20 per cent through working with Dell.

Albatal said: "We're expanding the channel partner community and have recruited 28 VMware-specific resellers so far this year and want 12 more by the end of the year."

FalconStor has just recruited Matt Wulkan as channel marketing director. Albatal said he "couldn't comment on file staff leaving. It's just the normal course of business" with "sales people being most exposed to the cycle. I wouldn't say there's anything extraordinary happening. We do have sales openings and we're looking for high-value sales people in the field." ®

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