StorageNetworks Rises with Demand for Data Back-Ups
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NEW YORK (Reuters) - Storage software and services company StorageNetworks (Nasdaq:STOR - news) shares gained sharply for a second day on Tuesday as investors bet that companies will revamp their data back-up systems in the wake of the devastating attack on the World Trade Center last week.
On a day when the Dow Jones Industrial Average and the Nasdaq composite index gained less than 1 percent, investors pushed shares in the company up as much as 21 percent.
The World Trade Center collapse underscored the need to have data backed up not just within an office, but in an off-site location as well, analysts said.
For instance, financial companies such as Morgan Stanley (NYSE:MWD - news) that were in the World Trade Center were able to function the day after the crash because their data was stored off-site.
``StorageNetworks' business is to provide storage service to companies, like managing their data centers,'' explained Ren Zamora, an analyst with First Union Securities.
``So something like this would mean that a company would have something off-site with (StorageNetworks), or they would be managing it on-site with them, but potentially have back-up capability where they are mirroring their data somewhere else,'' Zamora said.
Zamora said that sentiment has pushed shares of Waltham, Massachusetts-based StorageNetworks higher. The company's shares were up 58 cents, or nearly 14 percent, at $4.76 in afternoon trading after earlier rising as high as $5.06.
Hopkinton, Massachusetts-based EMC Corp. (NYSE:EMC - news), which makes the hardware that individual companies and storage service companies like StorageNetworks use to back up their data, also got a boost in early trading before turning lower.
EMC shares were off 60 cents, or 4 percent, at $13.15 in afternoon trading after earlier rising as high as $14.75.
But the potential gains are still small, one investment bank said. Credit Suisse First Boston said that data service providers could see revenues rise from 3 percent to 10 percent in the fourth quarter because of the attack.
``We do not expect much of an impact on third quarter operating results as a result of last week's events but there could impact on Q4 operating results as the flow through of potential lower bookings in the third quarter and fourth quarter impacts fourth quarter and 2002 revenues,'' Tim Newington wrote.
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