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Netezza nets plenty of cash in IPO

Teradata licks lips

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Netezza sure sounds like some namby-pamby Web 2.0 start-up destined for failure. The company, however, is actually a masculine, high-end hardware and software maker that just enjoyed an almost spectacular initial public offering (IPO).

On Thursday, Netezza stock - NZ on the NYSE - jumped 45 per cent from $12 to $17.39 per share. The company managed to hold most of those gains during a brutal Friday, closing the week at $17.24. The successful IPO proves there's some life in a server hardware market that has been thin on companies willing to go public over the last few years.

Netezza competes against the likes of Teradata - soon to spin out from NCR - and Oracle, IBM and HP in the data warehousing realm. These companies all have products for collecting and analyzing huge amounts of information to give retailers, banks, manufactures and others a better grasp on their businesses. Wal-Mart and Dell, both Teradata customers, stand out as two, well-known advocates of data warehousing technology, using their systems for maximum supply chain efficiency.

Founded in 2000, Netezza has adopted the appliance model with its products. This means that it hopes to create easy-to-use systems that combine hardware and software for the singular purpose of data warehousing.

The Netezza Performance Server can apparently beat rivals because of its Intelligent Query Streaming design.

"Netezza has placed processing power next to the data, so data analysis occurs at the source at streaming speeds, delivering an unprecedented boost in performance," the company claims. "Analyses that took days now take just seconds."

We interviewed Overstock.com CEO Patrick Byrne this week, and he noted that the company's Teradata-based system can crank out a complete, data center-wide status check using data that's just 30 seconds old. So, even with speed on its side, Netezza faces serious challenges when going up against the incumbent. (We'll have more from Byrne next week.)

Netezza managed a 48 per cent rise in year-over-year revenue to $80m. Still, it posted a $14m net loss in 2007.

For awhile, Rackable Systems stood as the only real server vendor of note to IPO in recent years. Now, however, you have data center players like Bladelogic, Voltaire and Compellent looking to get rich publicly. And others such as Data Domain, Supermicro and Infinera that have already made the leap. ®

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