BakBone Nabs Constant Data

In a move designed to improve its market position, BakBone Software has purchased data replication vendor Constant Data Inc., of Hopkins, Minn., for $5.5 million in cash and contingency payments. (See BakBone Buys Constant Data.)

This is BakBone's first acquisition, and it comes at an important juncture for the company. Despite an ongoing financial problem that's forced BakBone to redo years of financial information, the company appears to be pressing ahead with customer wins and plans to improve its products. (See BakBone Still Out of Whack.)

Constant Data has just 10 employees, about six of whom will be joining BakBone permanently. Its customer base includes about 55 to 60 buyers of its real-time replication package.

Small potatoes compared with BakBone's 230 employees and claim of 12,000 customers. But Ken Horner, BakBone's senior VP of corporate development and strategy, says Constant Data's technology is farther along the path of continuous data protection (CDP), thanks to the way it inserts "state hooks" into replicated data to ensure rollback to a particular point in time.

Horner himself says the buy will accelerate BakBone's strategic plan to augment its replication and backup wares. (See BakBone Releases IDP .) Indeed, there's an aggressive integration plan: "Our expectation is to sell products under Constant Data's name for the next two weeks. By early December, we'll have a new product out under the BakBone brand."By the end of the first quarter, BakBone plans to offer a newly integrated data protection package, with replication and CDP modules, all managed by BakBone's existing NetVault software.

BakBone's move into CDP comes at a time when other storage software suppliers, including EMC, Microsoft, and Symantec, are hustling purposefully in that direction. It also comes when BakBone needs to stay focused on its core business, despite the seemingly endless snarl of its financial reporting problem -- which has CEO Jim Johnson routinely issuing open letters pleading for patience from shareholders. (See BakBone Publishes Open Letter.)

At least one analyst, Mike Shonstrom of Emerging Growth Equities, thinks the reporting issue hasn't hurt BakBone that much, and he views the acquisition positively. Both BakBone and Constant Data, he says, are in one of the fastest-growing segments of the storage market. And so far, BakBone's auditing hasn't affected its financials, he maintains. "They had been making money up to that point and will continue to be making it subsequently," he says.

BakBone says that for the six months ended September 30, 2005, the value of contracts signed was $20.7 million -- up 27 percent from the same period a year earlier. The company says it's debt free. Cash on hand at the end of September was $14.7 million. So far, it's spent about $1.5 million on the reauditing issue.

Among the Constant Data employees coming aboard are the three founders and the CEO, Paul Sustman. The Constant Data crew will remain in Minnesota, which BakBone will declare an R&D outpost. Sustman will work on the integration of BakBone and Constant Data products under the supervision of Horner, who joined BakBone in September. (See BakBone Hires Horner.)Mary Jander, Site Editor, Byte and Switch

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