Home & Office

NetApp buys Data Domain for US$1.5B

NetApp says it plans to work Data Domain's de-duplication storage systems--which aim to cut costs and make data management easier--into its own global sales channel.
Written by Larry Dignan, Contributor

NetApp said Wednesday that it will acquire Data Domain for $US1.5 billion, or US$25 a share.

Data Domain makes de-duplication storage systems designed to cut cost and make data management easier. NetApp said in a statement that its game plan is to take Data Domain's products and work it through NetApp's global sales channel. Data Domain's products will become a line in NetApp's operations.

Ultimately Data Domain and NetApp's VTL lineup is designed to move companies off tape backups. For 2008, Data Domain had revenue of US$274 million, up from US$123.6 million in 2007. Net income for 2008 was US$21.6 million.

Needless to say, Data Domain investors were jazzed about the deal in afterhours trading. The NetApp deal propelled Data Domain to the levels where it traded for much of 2008 before the meltdown.

Separately, NetApp reported fourth quarter earnings of US$75 million, or US$0. 23 a share, on revenue of US$880 million, which was down from US$938 million a year ago. Excluding charges, NetApp reported earnings of US$103 million, or 31 cents a share. Wall Street had been expecting earnings of US$0.23 a share.

For fiscal 2009, NetApp reported net income of US$87 million, or US$0.26 cents a share, on revenue of US$3.4 billion, up 3 percent from a year ago. Non-GAAP (generally accepted accounting principles) earnings were US$364 million, or US$1.09 a share.

NetApp refrained from providing first quarter revenue guidance due to the economy. It did project non-GAAP gross margins of 61 percent for fiscal 2010. In a statement, NetApp chief Dan Warmenhoven said the company has kept the lid on expenses and managed to raise operating margins for three quarters in a row.

NetApp, along with EMC, appear to be among the winners amid data center overhauls. By playing nice with various giants--Hewlett-Packard, IBM, Cisco, and Dell, to name a few--these independent storage vendors appear poised to tag along no matter what architecture ultimately wins.

This article was first published as a blog post on ZDNet.

Editorial standards