Virtualized Data Center, Services Strength Drive VAR Datalink's Growth

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A growing demand for virtualized data center infrastructures drove revenue for midrange solution provider Datalink to record levels in the first quarter of 2013, the company reported Monday.

That demand helped drive Datalink's Cisco business, and with it strong growth in its services, even as sales of many of its other products, particularly storage, softened during the quarter.

Eden Prairie, Minn.-based Datalink, one of the few publicly listed midrange solution providers, reported revenue for its first quarter, which ended March 31, of $133.6 million, up 12 percent over the $119.1 million the company reported for the first quarter of 2012 and a record for any first quarter the company has reported.


[Related: VAR Datalink Acquires StraTech, Expands Eastern U.S. Footprint]

On a GAAP basis, the company reported earnings of $1.1 million, or 6 cents per share, about half the earnings of the same period last year. Non-GAAP earnings for the quarter were $3.2 million or 18 cents per share, up from last year's $2.9 million, or 17 cents per share.

The results included operations from Datalink's acquisition of Strategic Technologies (StraTech), which gave the company a solid East Coast presence.

Cisco was a big part of Datalink's growth, said company President and CEO Paul Lidsky.

Datalink's Cisco product and services sales rose 64 percent over last year, Lidsky said. "Cisco servers and networking are part of every data center solution we sell," he said.

Datalink in the first quarter signed 24 virtualized data center contracts, with an average revenue per order of about $900,000, Lidsky said.

"It shows we are doing a good job of moving from siloed storage infrastructures and moving to unified data center solutions," he said.

Focusing on Cisco and unified data center solutions has helped Datalink differentiate itself from its competition, Lidsky said in response to an analyst question during the question-and-answer period of Monday's financial conference call.

Customers don't buy Cisco unified computing by itself, but instead buy solutions, which helps eliminate competition on a price basis, he said. "This has protected the pricing, and added business opportunities," he said.

Most of Datalink's virtualized data center solutions are centered on one of two converged infrastructure solutions, either FlexPod, the Cisco-NetApp joint reference architecture, or VSPEX, the Cisco-EMC joint reference architecture, Lidsky said.

NEXT: Cashing In On A Growing Services Business

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