Data Domain Crushes the Tape

About a year ago, when I talked to Data Domain (Nasdaq: DDUP  ) CEO Frank Slootman, he was upbeat about his business. He wasn't kidding. Yesterday, his company went public, and Slootman saw his stock price soar 66% to $24.95.

Tape storage has been around for decades, and it's still a big business. But the ongoing maintenance costs are high, tapes are susceptible to damage, and restoring data can be slow.

Data Domain thinks it has a much better mousetrap. The company develops and uses disk-based and so-called deduplication technology. Its system compresses stored data, squeezing much more information into a smaller, more cost-effective space. Other key features include continuous verification and compatibility with backup software from players like EMC (NYSE: EMC  ) , IBM (NYSE: IBM  ) , and Symantec (Nasdaq: SYMC  ) .

Data Domain's revenue has been sizzling. In 2006, it increased more than fivefold to $46.4 million. That growth has continued into fiscal Q1 of this year, with revenues surging 2.5 times to $20.2 million.

"Data deduplication is different, because enterprises are clamoring for new ways to protect their data, with greater efficiency and effectiveness," said Simon Robinson, Research Director of Storage at The 451 Group. He explained to me that Data Domain's hypergrowth puts it on the cutting edge of this movement. "The technology is ready, and so is the market."

The market potential for Data Domain does look promising. Robinson thinks the market will "easily" reach $1 billion by 2009.

That juicy opportunity is attracting competition from companies like EMC, Inside Value pick Symantec, Quantum (NYSE: QTM  ) , and Network Appliance (Nasdaq: NTAP  ) . But Data Domain's deduplication technology is top-notch, and the market is big enough for various players.

So for the next year or so, Data Domain should bask in its resplendent growth. And momentum investors will likely ensure that the stock has lots of fans.

Further unduplicated Foolishness:

Fool contributor Tom Taulli, author of The Complete M&A Handbook, does not own shares mentioned in this article. He is currently ranked 1,831 out of 30,414 in CAPS.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 530462, ~/Articles/ArticleHandler.aspx, 12/17/2014 3:05:50 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 17,256.68 187.81 1.10%
S&P 500 2,002.64 29.90 1.52%
NASD 4,610.29 62.46 1.37%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

12/17/2014 2:49 PM
EMC $28.47 Up +0.38 +1.35%
EMC Corp CAPS Rating: *****
IBM $151.85 Up +0.44 +0.29%
International Busi… CAPS Rating: ****
NTAP $40.66 Up +0.01 +0.02%
NetApp CAPS Rating: ****
SYMC $25.13 Up +0.06 +0.24%
Symantec CAPS Rating: ***

Advertisement