Data Domain Dives In

5:20 PM -- De-dupe specialist Data Domain joined the growing list of storage vendors to go public today, prompting a frenzy of trading in the vendor's shares.

Initially priced at $15, the stock soon rose to well over $21, more than 40 percent above the vendor's range. At close of trading this afternoon, the shares were priced at $24.95.

Analyst firm The 451 Group takes this as further evidence of the changing economic climate for storage vendors. "The fact that Data Domain priced well above its expected range indicates that investors are once again willing to pay top dollar for explosive growth at technology companies," said research director Simon Robinson in a note today, alluding to strong first-day trading from the likes of Isilon and Double-Take. (See Double-Take, Isilon Go Public, Isilon Announces IPO, and Double-Take Seeks IPO.)

Isilon, of course, came to earth with a bump earlier this year, suffering ongoing losses in its first quarter as a publicly traded company. (See Isilon: The Honeymoon's Over.) Despite growing revenues, analysts urged the NAS specialist to seek out larger deals in an attempt to narrow its losses. (See Isilon Reports Earnings and Isilon Bleeds, Vows Profits.)

The laws of gravity dictate that firms cannot bask in the warm afterglow of an IPO forever, something newly public firms Mellanox and Riverbed well know. (See The Slings & Arrows of IPOs.)It remains to be seen exactly how Data Domain will fare over the coming months, although the 451 Group's Robinson predicts a rosy future for the company. "We project Data Domain will close out this year with revenue of at least $120m, two-and-a-half times the revenue it generated in 2006," he writes. "Coming out of the gate with a valuation of about $770m, we expect Data Domain will garner a ten-digit market capitalization in short order."

Profitability nonetheless remains an issue, and there are no indications as to when the de-dupe trailblazer will be in the black. Data Domain suffered a net loss of $4 million last year and $1.5 million for the first quarter of 2007, according to documents filed with the SEC. As of the end of March this year, the firm had an accumulated deficit of more than $38 million.

Not so long ago, IPOs were like no-hitters in baseball -- an all too-infrequent, yet headline-grabbing event that seemed to defy the odds. With an improving economic climate, and an increasingly confident tech sector, public offerings are now much more common; although, for Data Domain, the really hard work has only just begun.

James Rogers, Senior Editor Byte and Switch