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To: GARY P GROBBEL who wrote (43216)	11/16/2005 3:31:50 PM
From: GARY P GROBBEL	Read Replies (1) \| Respond to of 120411

QGI- B: Rubicon Global Research, LLC Maintains Strong-Buy Rating on QS I, Inc. (PCX:QGI) B: Rubicon Global Research, LLC Maintains Strong-Buy Rating on QSGI, Inc. (PCX:Q I) PORTLAND, Ore., Nov 16, 2005 (BUSINESS WIRE) -- Rubicon Global Research, LLC maintains a strong-buy rating on QSGI, Inc. (PCX:QGI). Despite the weaker than expected third quarter results, the recent price decline creates an opportunity and we believe the shares remain undervalued. More importantly, several positive takeaways in the quarter not only validate our thesis, but also reflect the rapidly growing business opportunities for QGI. Key points include: 1) The shortfall (from out model) was entirely a result of just one business segment, which did not meet its objectives. However, the weakness does not appear to be a demand problem, but rather a function of timing and the size of each deal. We have confidence in the management group and believe the division is back on track in the current quarter (indicative of yesterdays contract announcement). We would also note that this division is not the key growth engine for the company. 2) The key growth area, the Data Security and Compliance segment, exceeded expectations in the recent quarter, growing a very healthy 93% over last year and 42% sequentially. The division also represented nearly 50% of total revenues in the quarter, which enabled gross margins to expand. 3) Recent customer wins in the Data Security and Compliance segment began contributing in the 3rd quarter and will continue to ramp in the 4th quarter. We also expect additional customer wins moving forward. The company's expanded sales effort along with a growing awareness by major corporations regarding proper (and legal) disposal of IT equipment should support a continued healthy growth rate in the business. 4) With the more rapid growth in the Data Security and Compliance segment we also anticipate further margin expansion leading to accelerated bottom line performance as we move into 2006. As a result of these takeaways, we are adjusting our model just slightly, and firmly believe the business is tracking well. With the shares severely depressed (an overreaction in our opinion), we are maintaining a strong buy rating on the company. A report published on July 27, 2005, by Rubicon Global Research, LLC is currently available. Rubicon Global Research, LLC is a wholly-owned subsidiary of Rubicon Global Holdings, LLC, a registered NASD company. SOURCE: Rubicon Global Research, LLC