Datalink Updates Guidance

Datalink Corporation revised its financial guidance for the secondquarter ended June 30, 2007

July 3, 2007

2 Min Read
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CHANHASSEN, Minn. -- Datalink Corporation (Nasdaq:DTLK), a leading independent informationstorage architect, today revised its financial guidance for the secondquarter ended June 30, 2007.

The company anticipates revenues for the second quarter of 2007 in the rangeof $40 million to $41 million, compared with $39.8 million in theyear-earlier period and $40.9 million for the 2007 first quarter. Year-agorevenue did not include the acquisition of Midrange Computer Solutions(MCSI), which closed in February 2007, and the 2007 first-quarterperformance included two months of MCSI revenue. On the basis of generallyaccepted accounting principles (GAAP), Datalink anticipates a loss in therange of $.03 to $.05 per diluted share. The year-ago GAAP earnings totaled$.18 per diluted share, and the company had a loss per diluted share of $.06in the 2007 first quarter. The company's non-GAAP loss is expected to rangefrom $.01 to $.03 per diluted share for the 2007 second quarter. Thiscompares with non-GAAP net income of $.11 per diluted share a year-earlierand a non-GAAP loss of $.01 per diluted share in the first quarter of 2007. In April, Datalink provided revenue guidance of between $49 million and $54million, with GAAP net earnings ranging from break-even to $.05 per dilutedshare and non-GAAP earnings in the range of $.02 to $.07 per diluted share. "We have seen a slow down in IT and storage spending with some of our largercustomers, as they have become more cautious about the economy and theirindividual growth prospects. This cautiousness has created longer salescycles, with a number of large projects delayed from the second quarter. Asa result, we expect Datalink's revenue and earnings for the second quarterto be below our original guidance," commented Charlie Westling, Datalink'spresident and CEO.

"While this quarter's shortfall was disappointing to us, we still believethat the long-term trends for storage growth remain compelling, ascorporations generate more data in multiple formats, requiring updatedstorage products and services. Based on our backlog of over $30 million forthe third quarter and our current sales opportunity pipeline, we expect tosee an uplift in business activity in the second half of the year. We havetaken a number of steps to position the company to return to profitablegrowth during the remainder of 2007. These actions include:

  • combining the company's field engineering and customer supportorganizations in order to better utilize Datalink's technical resources;

  • merging the Western and South Central regions to take advantage ofeconomies of scale;

  • refocusing our efforts on acquiring new enterprise accounts; and

  • holding the workforce at current levels while focusing onopportunities to increase employee productivity."

Datalink Corp.

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