Datalink Bucks Soft Economy, Reports Strong 2Q

Improved efficiencies stemming from an acquisition of another solution provider last year combined with a focus on enterprise customers and on high-growth markets requiring new technologies and services helped propel the Minneapolis-based storage solution provider to a strong second quarter.

The Minneapolis-based storage solution provider said revenue for the quarter ended June 30, 2008 was $49.7 million, which was up 23 percent compared to the $40.3 million it reported in the prior-year period.

The company also reported earnings of about $1 million, or $0.08 per share, for the second quarter, which compares to a loss of $346,000 or $0.03 per share in the second quarter of 2007.

The numbers included the second quarter 2008 and 2007 revenue and earnings of Midrange Computer Solutions, Inc. (MCSI), which Datalink acquired for $14 million in January 31, 2007.

Datalink reported services revenue of $20.7 million, which was a 29-percent increase over the amount reported last year.

Operating income margin for the quarter was 3.1 percent, up from 1.4 percent last quarter and a negative 1.9 percent last year, while productivity measured as gross profit per employee on an annualized basis was $829,000, up 32 percent over last year, Datalink said.

Charlie Westling, Datalink's president and CEO, said in a statement, "Our record second quarter revenue was particularly strong on a year-over-year basis considering both periods include the full impact of the MCSI acquisition. When we acquired MCSI, we believed we would benefit from being better positioned to deliver comprehensive storage solutions while creating efficiencies in bringing the two companies together. Our performance this quarter reflects this."

Datalink company ended the quarter with a backlog of $32 million compared to $30 million at the end of the first quarter of 2008. Based on that backlog and on opportunities the company is currently pursuing, Datalink expects revenue to be between $49 million and $53 million, with earnings to be between $0.06 and $0.10 per share in the third quarter of 2008. This compares with revenue of $45.8 million and earnings of $0.07 per share in the third quarter of 2007.