Datalink falls on lower earnings
Shares of Chanhassen, Minn.-based Datalink Corporation (Nasdaq: DTLK) are trading lower following news the information storage company’s first quarter earnings missed expectations.
The net loss for the quarter ended March 31 was $719,000, or $0.06 per share, compared with net income of $833,000, or $0.08 per share in the first three months of 2006, Datalink announced before the opening bell. Analysts were looking for first-quarter earnings of $0.05 per share before items. Datalink’s financial results include two months of revenues and expenses associated with the $14 million acquisition of Midrange Computer Solutions, Inc., which was finalized on Jan. 31.
“Earnings were in line with what we had expected for the quarter and reflect the impact of owning MCSI for only two months, the lower gross margins associated with historical MCSI product and maintenance service sales, and the extensive orientation and product solutions cross-training that we started in early February,” Datalink President and CEO Charlie Westling said. He added that key elements of the integration of MSCI have been completed and that annual cost savings of between $1 and $2 million should be fully phased in by the end of the second quarter on June 30.
First quarter 2007 revenues were $40.9 million, a rise of 19% compared with $34.3 million during the same period a year earlier. Datalink brought in $38.7 million in the final three months of 2006.
Looking ahead, the company projects second quarter revenues of between $49 million and $54 million with earnings in the range of $0.00 per share to $0.05 per share. Wall Street had expected revenues of $50.5 million and earnings of $0.11 per share, excluding items.
At 12:33 p.m. ET shares were down $1.80, or 21.03%, to $6.76. The 52-week high is $12.50, set on Oct. 12, 2006. The 52-week low of $4.76 was set on June 14, 2006.
