DTLK – Datalink Q1 2007 Earnings

By: ispeculatornew
Date posted: 04.25.2007 (12:00 am) | Write a Comment  (0 Comments)

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DTLK – Datalink (Nasdaq) (Closing Price – $6.76)

Datalink reported very disappointing first quarter results today and the stock price took quite a hit. However, I think the selloff provides a good buying opportunity for those willing to hold through the end of the year.

Datalink reported revenue of 40.91 million. This was an increase sequentially and year over year, but the increase was due to the addition of two months of revenues from their acquisition of MSCI. The lower margins of MSCI’s products and the costs related to integrating MSCI took a toll on earnings and Datalink reported a loss of 0.06.

The CEO mentioned that the integration was substantially complete but also stated gross margins will be impacted by the lower margin sales for the next few quarters. Datalink gave guidance for revenues between 49 and 54 million for the second quarter and earnings of break even to five cents a share.

If you didn’t sell today I think most of the damage is done and Datalink’s results will improve as the year goes on. If you have a time horizon of at least a few quarters I would recommend buying some shares once the share price finds support.

I think the share price will be down or flat until next quarter so it may be wise just to watch from the sidelines and see what they report next quarter. However, I think results will be much better in the second half of the year and purchases made near the current price will be a wise investment.

Disclosure: I currently own shares of DTLK.

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