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Regional solution provider Datalink reported a record quarterly revenue on the strength of its acquisition last year of another VAR, Incentra, and said that its move to expand beyond its traditional storage focus is showing success.
Datalink, Chanhassen, Minn., has managed to take advantage of its acquisitions of Incentra and of the networking business of a smaller solution provider to start a push into the server and networking business.
Datalink on Wednesday reported revenue for its second quarter 2010, which ended June 30, of $70.9 million, up 62 percent over the $43.7 million it reported during the second quarter of 2009.
Datalink also reported earnings of $5,000, or essentially break-even, on a per-share basis, compared to earnings of $283,000, or 2 cents per share, it reported a year ago.
Part of the increase in revenue came from its acquisition late last year of the reseller business of Incentra. However, said Gregory Barnum, vice president of administration and CFO, the company's legacy business still grew about 20 percent over last year. "As we move beyond the acquisition, it gets fuzzy trying to separate who sells what," Barnum said.
That acquisition came just days after Datalink acquired the Cisco-centric networking business of Bloomington, Minn.-based Cross Telecom for $2 million in a bid to prepare for the industry move towards data center virtualization and the convergence of storage and IP networks.
Product revenue in the second quarter was up 92 percent and services revenue was up 29 percent over the same period last year. Barnum called the huge growth in product revenue good news as it will lead to increased services business in the future.
Product margins were about 22.5 percent during the second quarter of 2010, up from 21.8 percent last year, while services margins have been in the 27 percent to 30 percent range, Barnum said.
About 38 percent of Datalink's revenue came from sales of disk-related products, compared to 4 percent from tape, 6 percent from software, 7 percent from networking, 7 percent from servers, and 38 percent from services.
Next: Growing Its Server And Networking Business