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Overland Hires New CEO After Struggling Through Tough Fiscal Year

Overland Storage Inc., a local maker of data storage systems, finished a tough 12 months, reporting a net loss of $44.1 million for the year ended June 30, more than double the $19.5 million net loss for the prior year.

Revenue dropped by $49 million to $160.4 million.

For its fourth quarter, Overland sustained a net loss of $6 million on revenue of $34 million, compared with a net loss of $6.8 million on revenue of $41.7 million for the like period of 2006.

The numbers weren’t that surprising, as Overland has been restructuring for the past two years, struggling to find new revenue sources after the departure of its former largest customer, Hewlett-Packard Co. That customer once generated more than half of Overland’s sales.

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On the plus side, Overland reported making improved profit margins on products in the recently completed quarter, and posted positive cash flow for the first time in two years.

It also named Vern LoForti its new chief executive. LoForti served as Overland’s chief financial officer for the past 12 years.

Chairman and interim Chief Executive Officer Scott McClendon said he’s worked with LoForti for many years and no one knows the company better, or is better qualified to lead the company to profitability.

“The last two years have been disappointing. After the extreme efforts of the past several months, I am now optimistic, more so than at any time during the recent past,” said LoForti.

Overland also named Kurt Kalbfleisch as its interim CFO.

Traded on Nasdaq under OVRL, shares continued to lose and fell to $1.62 on Aug. 13, and have ranged from $1.60 to $7.76 in the past 52 weeks.

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Kintera Still In Loss Mode:

Kintera Inc., a San Diego firm that makes software to help nonprofits better manage donations, is ever so close to, but still coming up short of, making money.

For the second quarter, it reported a net loss of $2.8 million on revenue of $12 million. That compared with a net loss of $8.4 million on revenue of $11.4 million for the like period of 2006.

When looking at Kintera’s EBIDA, or earnings before interest, taxes, depreciation and amortization, the company still is losing money, $667,000 compared with an EBIDA loss of $5.9 million in the second quarter of 2006.

Richard LaBarbera, the chief executive who took over in March after founder, Chairman and CEO Harry Gruber was forced out by shareholders, said in an analysts’ conference call, “Kintera is less than $700,000 away from achieving adjusted EBIDA profitability.”

Will it come in Q3? LaBarbera hedged his bets by forecasting a range of EBIDA from break-even to a loss of 3 cents per share. Revenue will come in between $11 million and $12 million.

All this really means is that Kintera is short of making a profit, either on an EBIDA or net basis. It’s a threshold the company has yet to reach in its eight-year history.

That’s one of the reasons some larger shareholders got fed up last year and objected to the way the company was run. Eventually, these dissenting voices couldn’t be ignored, and Gruber resigned as chairman and CEO, but still retains a seat on the board.

One thing to keep an eye on: Kintera’s cash. It’s down to $12 million, from nearly $19 million at the end of 2006, and more than $30 million at the end of 2005.

CFO Dick Davidson said cash shouldn’t be an issue going forward, but that’s assuming it turns the corner someday soon.

In the meantime, Kintera’s cutting expenses by continuing to lay off employees. As of the end of June, it had 287 employees, down from 361 at the end of March, and 410 as of June 30, 2006.

Kintera, flush with stock early on in its history, expanded rapidly, buying lots of software firms in the same space to enhance its technology and gain market share.

The Street reacted positively to Gruber’s departure in February and sent shares, traded under KNTA on Nasdaq, up from about $1.20 to $2 plus in July. Yet investors weren’t that excited about the last report, and shares were trading just below $2 as of Aug. 13.

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DivX Plans To Spin Off Unit:

DivX Inc., a San Diego maker of video compression software, said it will focus on licensing its technology and spin off its Stage6 online video sharing Web site into a separate entity. To give investors a better idea of what that might mean to its bottom line, it provided numbers that showed what the company’s financial results would have been had it not poured $2.4 million into the Web site during the second quarter, and more than $3 million for the first half of this year.

DivX said its Stage6 has 10 million unique users, which sounds great, but it’s not making money.

Last month, DivX telegraphed this news by saying founder and CEO Jordan Greenhall will leave DivX to head up Stage6, which is seeking equity partners.

On a quarterly and first-half basis, DivX showed improved results on sales, but lower profits. For the second quarter, it had net income of $1 million on revenue of $13.1 million, compared with net income of $2.6 million on revenue of $10.4 million in the like quarter of 2006.

For the first half of the year, it had net income of $4.6 million on revenue of $38.5 million, compared with net income of $5.9 million on revenue of $27.3 million for the first half of 2006.

Since its initial public offering in September, DivX shares have performed erratically, shooting above $31 in November before losing steam and hitting $20 in April. As of Aug. 13, shares were trading at $13.87. Its 52-week range runs between $12.20 and $31.89.

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InfoSonics Reports Net Loss, Flat Sales:

InfoSonics Inc., a San Diego distributor of cell phones in Latin America, reported a net loss of $447,243 for its second quarter compared with a net profit of $127,360 for the like period of 2006. Revenue for both quarters was $58.2 million.

The company attributed the loss to a manufacturing partner getting into the lower-tier cell phone market, and those products having smaller profit margins than midtier or high-end phones.

For the first half, InfoSonics reported a net loss of $1 million on revenue of $116.6 million, compared with a net profit of $1.3 million on revenue of $112.4 million.

The firm’s stock, traded on Nasdaq under IFON, has taken a bath since reaching nearly $17 in June 2006, including heavy shorting action. As of Aug. 13, it hit a 52-week low at $2.24, and ranged as high as $7.02.

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ELY Hitting The Green:

Callaway Golf Co., which trades under ELY on the New York Stock Exchange, has made a long but steady ascent in the past year, after a less than stellar performance last year. As of Aug. 13, shares were just below $18, and were traded in early July above $19. About a year ago, it was traded at about $13, and in the past 52 weeks, it’s up about 40 percent.

For the second quarter, Callaway reported a profit of $36.6 million on revenue of $380 million. That compared with net income of $22.5 million on revenue of $341.8 million in the like quarter of 2006.

The company revised an earlier revenue forecast for 2007 to finish between $1.07 billion and $1.08 billion, up from an earlier forecast of $1.04 billion to $1.06 billion.

Callaway also said earnings per share this year should finish between 78 cents and 84 cents, up from previous per share guidance of 72 to 82 cents.

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Ticker Takes:

Axesstel Inc. reported a first-half net loss of $976,000 on revenue of $53.2 million compared with a net loss of $7 million on revenue of $33.3 million. ImageWare Systems Inc. reported a first-half net loss of $4.3 million on revenue of $3.1 million compared with a net loss of $2.7 million on revenue of $5.6 million for last year’s first half. Cubic Corp. said it is competing for a five- to 10-year, $50 billion contract with the General Services Administration. Pico Holdings Inc. reported a net loss of $3.7 million for the second quarter. Phoenix Footwear Group Inc. reported a second-quarter net loss of $929,000 on revenue of $25.2 million. SYS Technologies Inc. said it obtained $8 million in follow-on contracts from the U.S. Navy and Volkswagen of America Inc.


Send any news of locally based public companies to Mike Allen via e-mail at

mallen@sdbj.com

. He can be reached at (858) 277-6359.

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