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Storage Services Surge

The world of storage services appears to be in a growth spurt, judging by the news from several providers. But closer scrutiny shows some surprising blips on an otherwise heartening scan.

Fast facts: Users worldwide will spend close to $28 billion in 2005 on storage services like professional consulting and systems integration, according to IDC. This figure will continue to rise at a worldwide compound annual growth rate of about 5.8 percent annually through 2009, the firm maintains.

The uptick in storage services is reflected in recent news from a range of suppliers:

  • Datalink Corp. (Nasdaq: DTLK) on July 13 reported that its latest quarterly revenues increased 34 percent to $28.7 million year-over-year and 35 percent sequentially (see Datalink Reports Q2).
  • SAN Holdings Inc. (OTC: SANZ) today announced expectations of a 140 percent sequential increase in revenue from its new geospatial storage service when it reports results for the quarter (see SANZ Announces Results).
  • MTI Technology Corp. (Nasdaq: MTIC) reported in May that revenue for its fiscal fourth quarter rose 50 percent year-over-year to $35.6 million.
  • GlassHouse Technologies Inc. maintains it is doubling service revenues this year, with quarterly growth in the 20 to 25 percent range.

In addition to all this, EMC Corp. (NYSE: EMC) says that in the first quarter of 2005, revenue from professional services, systems maintenance, and other services rose 26 percent to a whopping $375 million.

All this is surely good news. But there are some subtle downsides, as well: For the six-month period prior to its latest report, Datalink showed a net loss of $4.3 million, or $0.41 per diluted share. Minus a one-time, non-cash charge, the company still showed a net loss of $753,000 or $0.07 per diluted share for the six-month period.

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