Storage VAR Datalink Reports Revenue Decline, Sees Better Quarter Ahead

Storage solution provider Datalink took a big hit from the economic downturn during the first quarter, and reported falling revenue and profit despite an increase in services revenue.

Minneapolis-based Datalink said that the current quarter will be better, but that it still expects revenue and earnings to be down from last year.

Datalink on Friday reported revenue for its first quarter, ended March 31, of $39.9 million, down 16 percent from the $47.7 million it reported in the prior-year period.

The company also reported a loss of $596,000 or 5 cents per share for the first quarter, compared to earnings of $505,000 or 4 cents per share in the first quarter of 2008.

Sales of services rose 7.3 percent to $20.6 million to account for just over half of Datalink's sales for the quarter. However, product sales for the quarter fell 32 percent to $19.3 million, the company reported.

Charlie Westling, Datalink's president and CEO, said in a statement that the first-quarter results reflect the impact of the economic slowdown experienced by many of his company's customers.

"Customers continue to scrutinize projects very closely and delay larger implementations wherever possible in an effort to conserve cash in this uncertain environment," Westling said.

Westling said Datalink ended its first quarter with a $29 million backlog, and that bookings picked up considerably during the last few weeks of March and the first two weeks of April.

As a result, Westling said, Datalink expects revenue to be between $40 million and $45 million for the second quarter, resulting in earnings ranging from a loss of 3 cents per share to a profit of 3 cents per share. That compares to revenue of $49.7 million in the second quarter of 2008 earnings or 8 cents per share.

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