Datalink Corp. has a market cap of $59.54 million; its shares were traded at around $4.49 with a P/E ratio of 112.25 and P/S ratio of 0.33. DTLK is in the portfolios of Jim Simons of Renaissance Technologies LLC, Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations: We ended the first quarter of 2010 with a backlog of $43 million, which represents firm orders we expect to recognize as revenue within the next 90 days. This compares to a backlog of $46 million as of December 31, 2009 and $29 million as of March 31, 2009. In the current environment, we continue to see the negative impact of the worldwide economic downturn on many of our customers, resulting in greater scrutiny given to storage spending projects and providing us with less visibility into their purchasing plans. We have also had some customers decide to significantly delay the implementation of projects which they have already purchased and paid for. We cannot predict what impact these economic uncertainties will have on our profitability going forward.
Net Sales. Our total net sales increased by $22.7 million for the three months ended March 31, 2010, or 56.9%, from $39.9 million for the comparable quarter in 2009. Our product sales increased $18.9 million, or 98.3%, to $38.2 million for the three months ended March 31, 2010, from $19.3 million for the comparable quarter in 2009. Our service sales increased $3.8 million, or 18.2%, to $24.4 million for the three months ended March 31, 2010 from $20.6 million for the comparable quarter in 2009.
General and administrative expenses increased $573,000 for the three months ended March 31, 2010, as compared to the same period in 2009. The increase in general and administrative expenses was primarily due to increased rent and facility charges of $347,000 for the additional Incentra offices we acquired and expenses of $66,000 for our 2010 national sales meeting.
Amortization of Intangibles. We had $659,000 of intangible asset amortization expenses for the three months ended March 31, 2010 as compared to intangible amortization expenses of $178,000 for the same three months in 2009. Amortization of intangibles expenses increased due to the acquisitions of Cross and Incentra in 2009.
Net cash used by operating activities was $641,000 for the three months ended March 31, 2010 as compared to net cash provided by operating activities of $1.5 million for the three months ended March 31, 2009. The decrease in cash provided by operations was due primarily to our net loss for the quarter of $891,000. Net cash provided by operating activities for the three months ended March 31, 2009 was primarily due to an increase of $2.0 million in accounts receivable and accounts payable from the collection of customer support contracts. While we amortize the revenues from these contracts over the life of the contract, the customer typically pays for the contracts at the beginning of the contract period which favorably impacts our cash flows.
Net cash used in investing activities was $2.1 million for the three months ended March 31, 2010. The primary use of cash for the first quarter of 2009 was the payment of a $3.0 million note per the terms of our acquisition agreement for Incentra. Net cash used in investing activities was $5,000 for the three months ended March 31, 2009. We are planning for up to $700,000 of capital expenditures for the remainder of 2010 related to enhancements to our management information systems and upgraded computer equipment.
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