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FalconStor Software (NASDAQ: FALC) , a
provider of disk-based data protection, announced slightly lower revenues for
its first quarter—$21 million, compared with $21.8 million for the same period
a year ago.  

FalconStor reported a net loss of $900,000, or 2 cents per share, compared with
a net income of $1.3 million, or 3 cents per share, for the same period a year
ago. Non-GAAP net income came in at $600,000, compared with $2.9 million
during the same period last year.

FalconStor said channel sales represented 64 percent of worldwide revenue, up
from 58 percent during the same time last year.

The company closed the quarter with $41.8 million in cash, cash equivalents and
marketable securities. Cash flow from operations for the first quarter was $3.3

“We are confident that our continued investment in development, marketing,
sales and support will enable us to expand our market share and to leapfrog the
competition,” said ReiJane Huai, chairman and CEO,
in a prepared statement. “As a result, we have continued to hire, knowing
that it may impact our earnings in the short term, but we believe it will
foster the long-term growth of the company. Even with these investments,
we are pleased that we had a non-GAAP profit for the quarter and that we
continued to generate positive cash flows from operations.”

The company also reported on key strategic partners. Business with Sun
Microsystems is up approximately 25 percent year over year, and the company
believes the merger between Oracle and Sun will have a positive effect for
FalconStor as FalconStor “believes the underlying demand remains strong.”

FalconStor is still targeting revenues to be in the range of $96 million to
$100 million for 2009.