Herndon-based GTSI, still recovering from its Small Business Administration suspension in 2010, said last month it finally has a stable sales staff and expects its services business to grow.

But the company is still facing significant declines in its product sales, raising questions about its path forward.

The contractor, which resells computer hardware and software and provides related information technology services, was suspended after the SBA alleged it was part of a scheme that “resulted in contracts set aside for small businesses being awarded to ineligible contractors.” The suspension came after a Washington Post investigation that revealed relationships between GTSI and three small businesses, and was lifted when GTSI agreed to remove its chief executive and general counsel and turn over internal business documents.

For 2011, GTSI posted profit of $506,000 (5 cents a share), a boost from its $930,000 loss (10 cents a share) in 2010. But sales dropped nearly 47 percent for the year, to $356.7 million.

In a call with investors last month, Peter Whitfield, GTSI’s chief financial officer, said the company’s product revenue fell about 50 percent, with hardware sales declining by just over 52 percent and software sales by nearly 44 percent.

Still, company officials were upbeat about the possibilities of growth. The firm has largely recovered from a flight of employees after its suspension, when the number of outside sales representatives dropped from 56 to 32 as of January 2011.

“That is largely behind us today, and we’re back to 43 outside sales reps on board with additional offers extended,” GTSI’s president and chief executive Sterling E. Phillips Jr. said during the call. “Turnover is down and we have a richer recruiting pipeline.”

The company, which declined to provide comment for this story, has said it must grow its services work, and last year purchased Fredericksburg-based Information Systems Consulting Group.

For the year, services revenue decreased slightly, but, in the fourth quarter, increased 23.7 percent, said Whitfield, who credited the growth to InSysCo.

Still Phillips suggested GTSI is considering alternative options.

“Our board of directors is committed to and focused on improving shareholder returns and liquidity,” he said. “There are alternative ways to do that and the board is considering all options.”

The company’s stock has fallen from around $12 a share in 2007 to around $5 a share today.

Bob Kipps, managing director of the McLean-based investment firm KippsDeSanto, said GTSI’s strategy called for building up its services work, even before its suspension. He said GTSI can differentiate itself from other services providers because it offers both products and services.

“They touch a lot of customers, they have a lot of [contract] vehicles,” he said. “They have all of the tools to be successful.”

Mike Crawford, an equity analyst at B. Riley & Co., said the company is so undervalued in the stock market that it could also make a reasonably-priced acquisition for an interested buyer.

“The market is betting that there’s going to be a decline in value here rather than any value creation, and to me it looks a little too Draconian,” he said.