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

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The company is also in discussions with VCE, the EMC-Cisco-VMware joint venture developer of Vblock converged infrastructures, and is likely to sign a contract once it works out the services opportunities, Datalink's Lidsky said.

But for now, moving customers to a reference architecture is easier than convincing them to implement a pre-built Vblock solution, he said. "Customers often want to migrate to unified data centers using existing infrastructures," he said. "And so they don't want to buy a pre-packaged solution at this point."

The other bright spot in Datalink's business is services. Datalink's managed services business rose 240 percent over last year, while its OneCall support services, which give customers the ability to contact Datalink for support on solutions consisting of multivendor products, grew 37 percent. Both these services offer Datalink recurring revenue opportunities, Lidsky said.

Services, particularly managed services, will continue to grow in the future as customers continue to essentially remain understaffed in their IT departments, Lidsky said.

"We have gained momentum at many customers by convincing them to [use our services] to let them focus on their business needs. ... We think that's going to continue because there's no sense from any of our enterprise customers that they intend to grow their IT capabilities."

Looking ahead, Datalink expects second-quarter revenue of $134 million to $153 million, up 19 percent to 27 percent over the $120 million it reported last year. The company expects GAAP earnings per share of between 9 cents and 15 cents compared to 18 cents last year, and non-GAAP earnings per share of 22 cents to 28 cents compared to last year's 23 cents.


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