Datalink Corporation to Further Refine 2000 Revenue Recognition Policy; Company Responds to SEC Staff Accounting Bulletin No. 101.

Business Editors

MINNEAPOLIS--(BUSINESS WIRE)--March 27, 2000

Datalink Corporation (Nasdaq: DTLK), a premier independent provider of networked data storage solutions, announced today that in further response to the Securities and Exchange Commission's recently issued Staff Accounting Bulletin No. 101 - "Revenue recognition," Datalink will prospectively modify its revenue recognition policy for hardware and software products sold to customers when Datalink provides any installation or configuration services in connection with the sale.

Daniel J. Kinsella, Datalink's Chief Financial Officer, stated: "Since the issuance of SAB No. 101, Datalink has been working with PricewaterhouseCoopers, LLP, our independent accountants, to determine how the new guidance affects our revenue recognition policies. On Friday, March 24, our independent accountants advised us that, in their view, SAB No. 101 requires us to modify our accounting policy for revenue recognition on product sales effective January 1, 2000 when we provide installation or configuration services in connection with the sale. In most cases, our data storage solutions include both the sale of hardware and/or software products and the installation and configuration of these products. We historically recognized the revenues from these product sales at the time of shipment to our customers in a manner similar to the accounting practices of comparable companies in our industry. We generally recognized revenue from our separately priced installation and configuration services when we performed those services for our customers. Based on our independent accountants' new advice, beginning January 1, 2000, we will recognize revenue from hardware and software product sales when we complete our installation and configuration services." Kinsella stressed that Datalink's historical financial statements are in accordance with generally accepted accounting principles and that this policy change will have no effect on previously reported 1999 operating results.

Kinsella noted that Datalink plans to recognize a one-time charge resulting from the cumulative effect of this accounting policy change in the first quarter ending March 31, 2000. Kinsella observed that while Datalink has not yet determined the amount of the one-time cumulative effect charge, the accounting policy change merely defers the recognition of Datalink's revenues and does not impact cash flows or the amount of revenues Datalink will ultimately recognize. Kinsella stated, "Although we will record a cumulative effect charge, our 2000 first quarter results will include revenues from hardware and software products shipped to customers for which we had not completed our installation and configuration services for the customer by the end of December 1999. Similarly, we will defer into our 2000 second quarter the revenues for products shipped to our customers for which we will not have completed our installation and configuration services for the customer by the end of March 2000."

Greg R. Meland, Datalink's President and Chief Executive Officer, observed, "We believe that over the next two reporting quarters, our entire industry group will reconsider its revenue recognition policies in light of the new guidance being provided by the SEC and the accounting community."

Kinsella added that these changes are in addition to Datalink's previously announced change in accounting policy on account of SAB No. 101 for service contract revenues.

Datalink Corporation, based in Minneapolis, Minnesota, is a premier independent provider of networked data storage solutions for open systems computing environments. Datalink develops solutions that are designed to store, access and protect business critical information using best of breed technologies and professional services. Datalink's multi-tiered professional services organization delivers a comprehensive suite of services, including analysis, design, integration, implementation, training, technical support and maintenance.

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 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; any remaining impact of Year 2000; and volatility in our stock prices.