STOCKREPORTS

Digital Link Corporation

NASDAQ Symbol DLNK

Recent Price 23.00 52 Wk Range 24.13 - 13.75

Yield Nil 12-Mo. P/E 34.3

Quantitative Evaluation: Outlook (1 Lowest - 5 Highest) NA Fair Value NA Risk HIGH Earn/Div Rank NR
Technical Evaluation: BULLISH since 03/97 Rel. Strength Rank (1 Lowest - 99 Highest) 85 Insider Activity Neutral

Business Profile 21-FEB-97

Digital designs, manufactures and supports a broad range of high-speed digital access products for wide area networks. The company anticipates that its gross margins are likely to decrease in the future, as a result of a shift in the internetworking product mix sold toward lower-end products and, to a lesser extent, an increasing percentage of sales being made to higher volume customers such as OEMs and value added resellers, generally at greater discounts than sales to end users. In October 1996, directors authorized the repurchase of up to 500,000 company common shares.

Operation Review 21-FEB-97

Based on a preliminary report, revenues rose 17% in 1996, as strong demand for Internet applications continued to drive sales of both access and infrastructure products, and reflecting successful efforts to broaden the customer base. Gross margins narrowed on a less favorable product mix. With a 16% increase in SG&A expenses, 13% higher R&D costs, and 9.4% higher interest income, pretax earnings dropped 1.9%. After taxes at 31.4%, versus 31.0%, net income fell 2.4%, to $4,698,000 ($0.50 a share), from $4,814,000 ($0.51).

Stock Performance 18-JUL-97n

In the past 30 trading days, DLNK's shares have increased 19%, compared to a 7% rise in the S&P 500. Average trading volume for the past five days was 68,200 shares, compared with the 40-day moving average of 33,350 shares.

Key Stock Statistics

Fiscal Year Ending Dec. 31

Dividend Data: No cash dividends have been paid. The company plans to retain earnings for use in its business and therefore does not expect to pay cash dividends for the foreseeable future.

Business Summary 25-OCT-96

Digital Link Corporation designs, manufactures, markets and supports a broad range of high-speed digital access products for wide area networks (WANs) worldwide. Its products provide access to private WANs based on dedicated leased lines and public WANs based on centralized switching networks that use packet switching technologies such as Frame Relay, Switched Multimegabit Data Service (SMDS) and Asynchronous Transfer Mode (ATM). DLNK's products allow local area network (LAN)-based internetworking devices, such as routers, to access WANs and also integrate data with digitized voice and video traffic for more efficient line utilization.

The company's products are used both in the customer premise equipment (CPE) environment and in the networks of telephone companies and alternate-access providers. DLNK believes that it is a leader in the WAN access products market because of its modular software-based product platforms and its support of standards and standards-based products. These factors enabled DLNK to be one of the first companies to supply products that access Frame Relay and SMDS networks and the first company to supply products that allow access to ATM networks.

DLNK shipped its first product in 1985. In 1987, it began shipments of its Data Service Unit/Channel Service Unit (DSU/CSU) products. It started shipping its first SMDS access product in 1991, to address the evolving technologies of the WAN market. In 1992, DLNK introduced its first ATM access products. In 1993, it began shipping its inverse multiplexer product and its Encore family of enhanced T1/E1 access products.

The company markets its products worldwide directly to large end-users and telephone companies and indirectly through a network of VARs and selected OEMs to accommodate specific markets and customer support requirements. Sales to MCI and Siemens accounted for 12% and 11% of total 1995 sales, respectively. International sales decreased to 28% of the total in 1995, from 31% in 1994.

Important Developments

Feb. '97 The company introduced the Solo T1 Channel Service Unit (CSU), a simple network management protocol T1/fractional T1 CSU that connects PBX equipment, channel banks and other high-speed applications to public and private T1 carrier services. The product provides network managers with network monitoring, in-service diagnostics, network protection, and an integrated capability to generate and detect test patterns, which provides an important additional troubleshooting tool. The integrated test and diagnostic capabilities eliminate the need for external test equipment and remote site coordination. The product has a list price of $1,299 for the stand-alone model and $1,249 for the Ensemble WAN Access System module.

Capitalization

Long Term Debt: None (12/96).

Curr. Ratio	NA	4.9	4.5	2.8	4.1	NA	NA	NA	NA	NA
% LT Debt of Cap.	NA	Nil	Nil	Nil	Nil	Nil	Nil	Nil	NA	NA
% Net Inc.of Revs.	NA	10.9	12.5	9.8	11.4	11.8	12.5	11.7	NA	NA
% Ret. on Assets	NA	9.5	12.3	18.0	23.1	25.6	24.0	NA	NA	NA
% Ret. on Equity	NA	10.9	16.0	25.2	29.4	32.3	29.7	NA	NA	NA

Data as orig. reptd.; bef. results of disc. opers. and/or spec. items. Per share data adj. for stk. divs. as of ex-div. date. E-Estimated. NA-Not Available. NM-Not Meaningful. NR-Not Ranked.

Office--217 Humboldt Court, Sunnyvale, CA 94089. Tel--(408) 745-6200. Chrmn--V. Gupta. Pres & CEO--A. Fraser. VP-Fin, CFO, Secy & Investor Contact--Stanley E. Kazmierczak. Dirs--R. C. Alberding, G. M. Avis, N. K. Gupta, V. Gupta, C. R. Moore. Transfer Agent & Registrar--First Interstate Bank of California, SF. Incorporated--in California in 1985. Empl-- 211. S&P Analyst: Ted Groesbeck

This report is for information purposes and should not be considered a solicitation to buy or sell any security. Neither S&P nor any other party guarantee its accuracy or make warranties regarding results from its usage. Redistribution is prohibited without written permission. Copyright © 1997