January 18, 2011 / 3:15 PM / 7 years ago

UPDATE 1-Datalink shares jump 45 pct on raised Q4 outlook

* Sees Q4 rev $90 mln vs prior est $75-$80 mln

* Sees Q4 EPS $0.21-$0.24 vs prior est $0.12-$0.16

* Shares rise 45 pct

Jan 18 (Reuters) - Data storage and networking product maker Datalink Corp DTLK.O raised its fourth-quarter outlook on increased demand for its storage products, sending its shares up to a three-year high.

The company expects earnings of 21-24 cents a share, excluding items, on revenue of about $90 million for the fourth quarter. [ID:nASA01E1W]

It had previously estimated earnings of 12-16 cents a share, excluding items, on revenue of $75-$80 million.

“We continued to see strong demand for our data center solutions during the quarter as the result of a steadily increasing trend in technology spending,” Paul Lidsky, chief executive said.

Lidsky also attributed signing of new clients in the quarter to increased revenue growth, but said these transactions carry low gross margins. He expects gross margins to decline about 22 percent in the fourth quarter.

Shares of the Chanhassen, Minnesota-based Datalink rose to a three-year high of $6.60 early on Tuesday on Nasdaq, paring some gains to trade up $1.59 at $6.13. The stock has gained 32 percent in value since the company posted its third-quarter results in October. (Reporting by Siddharth Cavale in Bangalore; Editing by Don Sebastian) ((siddharth.cavale@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: siddharth.cavale.reuters.com@reuters.net))

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