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Data storage firm files for public offering

StorageNetworks, a company that designs and builds complicated data storage systems, files to raise as much as $270 million in an initial public offering.

StorageNetworks, a company that designs and builds complicated data storage systems, has filed to raise as much as $270 million in an initial public offering.

The company hopes to benefit from an ever-increasing need for data storage technology and services. The popularity of the Internet has created a tidal wave of data, which in turn has expanded the scope and complexity of keeping tabs on invoices, emails, communications and other information.

The increasing attention devoted to storage, and in a subset of the market called Storage Area Networks (SANs), resulted in several recent storage-related IPOs, including JNI, Brocade and Gadzoox.

SANs are special-purpose networks designed to split disk and tape storage into a separate centralized zone of the computing infrastructure. The approach is easier to manage than when storage is connected to a number of individual servers and offers the additional benefit of easing the burden on a company's primary network, analysts say.

But designing and installing such networks is expensive and complicated. StorageNetworks, based in Waltham, Mass., takes care of the job, renting companies access to its own storage systems at 20 data centers in 11 cities. The company plans to increase that number to 50 by the end of the year, it said in a Securities and Exchange Commission filing.

Most of the centers are run by AT&T Web Hosting Services, Exodus Communications, GlobalCenter and Level 3 Communications, the company said.

In 1999, StorageNetworks had revenues of $6.3 million and a net loss of $22.6 million. The company has 350 employees.

The company plans to trade on the Nasdaq market under the symbol "STOR." Underwriters of offerings are Goldman Sachs, Credit Suisse First Boston, Thomas Weisel Partners and Wit SoundView.

StorageNetworks uses storage products from Brocade Communications, Compaq, Dell, EMC, Legato Systems, Network Appliance, Sun Microsystems, and Veritas Software. The firm uses fiber-optic equipment from Metromedia Fiber Network.