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nStor Sells Subsidiary

nStor Technologies Inc. (Amex: NSO) has sold off one of its two subsidiaries, making its SAN array business its primary purpose (see nStor Sells STI Subsidiary).

nStor Technologies is the parent of telecom management software and services firm Stonehouse Technologies Inc. (STI) and of nStor Corp., a maker of Fibre Channel and SATA disk systems geared to the SMB market. The odd two-headed arrangement has been losing money for years, but nStor Technologies now has arranged to sell STI for $6.7 million ($5.6 million cash and $1.1 million in promissory notes) to Symphony Services, a technology software development and outsourcing company.

The sale, which still needs shareholder approval but is expected to close by the end of this year, hints that nStor Technologies sees its future in storage networking, not telecom management software.

It's a direction that wasn't so clear a couple of months back. In March and April 2004, management indicated there were plans to sell the storage division, which accounts for over half of nStor's sales (see NStor May Go Solo and A New Ripple for nStor).

What changed? nStor execs didn't respond for comment at press time, and it's just possible that a buyer for STI turned up at the right time. Notwithstanding, storage has been doing fairly well: In its latest earnings report, nStor shows that for the six months ended June 30, 2004, total storage sales of $7.8 million were up 52 percent year over year. STI revenues were up 53 percent for the same period.

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