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13.5 percent

drop in Datalink's market value after outlook lowered

$7.43

stock closing price Friday

Datalink stock drops 13% after forecast is cut

  • Article by: NEAL ST. ANTHONY
  • Star Tribune
  • October 5, 2012 - 8:22 PM

Datalink Corp., the Eden Prairie-based builder and manager of big data centers, lost 13.5 percent of its market value Friday after lowering its earnings outlook.

But CEO Paul Lidsky said better days are ahead.

The stock, which closed at $7.43 a share, has traded between $6.94 and $11 a share over the past year. Late Thursday, the company had lowered its sales and earnings guidance for the third quarter.

In an interview after the market closed Friday, Lidsky said an unspecified number of big customers have delayed orders for data center projects of up to $3 million each. He attributed the delays to caution over the November election and economic concerns.

"Our sales pipeline is growing, not shrinking," Lidsky said. "But a lot of our big-enterprise customers are waiting for the elections to see what's going to happen with taxes and health care. There's also some macroeconomic uncertainty. The good news is that these projects were not canceled."

He expects the orders to proceed in the fourth quarter and early next year.

"I'm positive about the business," Lidsky said. "We're hiring account and sales people and engineers as fast as we can find good ones."

Datalink, with more than 450 employees, last week completed its acquisition of North Carolina-based StraTech for $13.2 million in cash and 269,802 shares of stock. StraTech is an IT services firm that shares Datalink's business approach.

The deal, which increases Datalink's market share and physical presence across the Eastern Seaboard, adds an estimated $65 million in annualized product and services revenues. It also contributes more than 400 additional businesses to Datalink's customer base.

Datalink, with a market value of about $135 million, plans to report third-quarter financial results on Oct. 25.

Neal St. Anthony • 612-673-7144

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