Datalink Corporation Lowers Fourth Quarter 2000 and 2001 Earnings Guidance; Strong Growth In Revenues and Earnings Still Expected.

Business Editors & Technology Writers

MINNEAPOLIS--(BUSINESS WIRE)--Jan. 18, 2001

Live Webcast of Conference Call is Scheduled at 4:00 pm Central

Standard Time today, January 18, 2001

Datalink Corporation (Nasdaq:DTLK), a premier independent information storage architect, announced today revised guidance for its 2000 fourth quarter and for 2001.

Based upon preliminary results subject to change, Datalink expects to report fourth quarter 2000 revenues of approximately $39 million, and earnings of approximately $.06 to $.07 per diluted share. Datalink expects to report its 2000 audited results on February 14, 2001.

With this revised guidance, Datalink expects to report 2000 revenues of approximately $138 million and earnings per diluted share of approximately $.48 to $.49 per share before the cumulative impact of a change in accounting principle.

Greg Meland, Datalink's President and CEO commented, "We posted a 24% increase in sales over the fourth quarter of 1999 and had hoped to expand our operating margins. Higher operating expenses for hiring of new employees, professional fees, and goodwill amortization from a recent acquisition also prevented us from achieving the earnings levels we expected. As in past years, we experienced high levels of customer shipments near year-end. We do not recognize revenues on our shipments until we complete our installation services. At year-end, we had a higher level of installations that were not completed than in the previous year. We expect to recognize the revenue from those transactions in the first quarter of 2001. "

For 2001, Datalink announced that it expects revenues to be in the range of $176 to $185 million and earnings in a range of $.74 to $.76 per share.

Mr. Meland continued, "I want to emphasize that our 2001 revenue guidance is unchanged. We believe that we will increase revenues by at least 25% to 30% over 2000. We have lowered our 2001 earnings guidance to reflect our decision to rapidly expand our sales and technical staff. There is tremendous marketplace demand for Datalink's information storage expertise. Hiring and development costs in 2001 will rise as we build our staff. Even with the increased costs, we expect our earnings per share to increase approximately 50-55% over 2000. "

Mr. Meland continued, "We anticipate overall demand for networked storage to expand significantly in 2001. As an established expert in the design and implementation of these products, Datalink is well positioned to seize these new opportunities. Our increased spending on people will have a modest unfavorable impact on our 2001 operating margins but reflects an investment critical to our future success and plans for accelerated growth. "

Datalink Corporation, based in Minneapolis, Minnesota, is the nation's leading independent architect of enterprise-class information storage infrastructures. As an independent, Datalink designs, builds, and supports information storage architectures using the best possible technologies. Datalink's customized storage infrastructures ensure information availability, storage, protection, and continuity for clients worldwide.

Datalink will host a live web cast of its conference call at 4:00 pm Central Standard Time today, January 18, 2001 at Datalink's website, www.datalink.com. A replay is also available via web cast on Datalink's website through January 26, 2001.

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for certain forward-looking statements. This press release contains forward-looking statements, which reflect our views regarding future events and financial performance. These forward-looking statements are subject to certain risks and uncertainties, including those identified below, which could cause actual results to differ materially from historical results or those anticipated. The words "aim," "believe," "expect," "anticipate," "intend," "estimate" and other expressions which indicate future events and trends identify forward-looking statements. Actual future results and trends may differ materially from historical results or those anticipated depending upon a variety of factors, including, but not limited to: our ability to hire and retain key technical and other personnel; competition and pricing pressures and timing of our installations that may adversely affect our revenues and profits; the level of continuing demand for data storage; our dependence on key suppliers; the strain placed on our resources by growth and expansion; our ability to adapt to rapid technological change; risks associated with possible future acquisitions; fluctuations in our quarterly operating results; future changes in applicable accounting rules; and volatility in our stock price.