Firestone A chart on the wall of Larry Firestone’s office could make or break troubled Qualstar Corp. One column details all the new products the Simi Valley company hopes to bring to market. Another lists release dates stretching into 2013. Several months after a fractious takeover battle for the maker of tape storage and power supplies, CEO Firestone has ambitious plans to reverse an earnings slide through strategic planning and a focus on new product development in its power supply segment. He says it will be “one of the keys to the well-oiled machine.” But Firestone faces obstacles, including a lack of engineering sources as the company aims to transform its engineering organization into a new product production outfit. “This transformation will accelerate the growth of the company,” Firestone said. Despite those headwinds, Firestone has moved quickly to make change since the June proxy battle by BKF Capital Group Inc. and its controlling shareholder Steven N. Bronson. He has filled a vacant vice president of sales position, eliminated the company’s touchless mouse and computer monitor business, and invested in new product development in its power supply business — the components that supply power to electric devices. Indeed, Firestone says the company is on track to deliver a number of new products. For competitive reasons, Firestone could not give details of those products except to say Qualstar would expand the voltage ranges of its products. He also has cut the workforce by 13 percent to 61 employees. Firestone would not say if more cuts will be necessary and said the strategy — and its success — will determine staffing. “We need to size the business accordingly and have it fit within its skin,” he said. By far, the most dramatic change, however, has been the new emphasis on long term strategic planning, a function that Firestone said did not exist under previous leadership. “If we cannot say where we need to be, then the company retreats to be very tactical and that is typically a company that has failed,” Firestone said. BKF had no comment on Firestone’s changes, said Maria N. Fregosi, chief operating officer of the Boca Raton, Fla.-based investment firm. “We are monitoring the situation,” Fregosi said. “At this point we have not had any conversation with management.” New direction With or without the proxy contest, Qualstar was a company in need of a strategy and direction for both its tape library business and its power supply products business, Firestone said. While digital discs and cloud computing have reduced the need for storing data on tape libraries, that part of Qualstar’s business remains an important generator of sales. Indeed, tape remains critical to many companies for backing up and archiving data, said Matthew Brisse, a research director with Gartner Inc., an information technology research and advisory company. A recent survey by Gartner found that 78 percent of business respondents used tape storage to some degree or another, Brisse said. “It is probably the longest lasting storage medium out there today,” Brisse said. The survey was conducted in late 2011 with 121 companies in the U.S. and Europe responding. Qualstar tape libraries can store up to 33 petabytes and read at a fast speed of 63 terabytes per hour. Firestone said he expects spending on tape storage to increase in the coming years, as demand for data storage rises, especially by smaller companies which comprise Qualstar’s core client base. “There are so many people accessing data on a minute by minute basis,” Firestone said. Analysts such as Brisse believe tape libraries are a “non-growth” business. “Tape is not dead, but it is in serious decline,” Brisse said. Qualstar’s power supply business, marketed under the N2Power brand, is a strong segment for the company. In the fourth quarter, the most recent figures available, sales of that equipment generated $2.5 million in revenue compared to $1.7 million for the tape libraries. Qualstar has achieved 93 percent efficiency with its power supply products and that has customers buying, Firestone said. The efficiency rate is how much power is retained during the transfer of alternating current to direct current, or from direct current to direct current. New product, however, has been based on existing devices and making changes in voltage range and configuration, Firestone said. But a completely new product is on the drawing board. The company is working on a roadmap that will allow it to talk with customers about the new offerings even at this early stage, Firestone said. “That roadmap will be out by the end of the quarter and the new product timeline is still being worked out,” Firestone said.