Corporate Cloud Boomlet Continues: EMC Buys Isilon, Investors Make Out

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Photo: Kevin Dooley

Enterprise software giant EMC is buying Seattle-based data storage company Isilon for $2.25 billion, or $33.85 per share–a premium of 29% above Isilon’s closing stock price.The acquisition caps a great turnaround story for Isilon, whose stock price has gone up more than 500% in the last year after the company almost sank under the weight of accounting problems.

Isilon provides a particular type of network-attached storage for applications that require low-latency access to massive amounts of data, like digital media streaming and complicated scientific calculations. It’s got about 1,400 customers, mostly in media, life sciences, and government.

The company went public on the NASDAQ in December 2006, but was forced to restate earnings after some trouble with the SEC. The company reinstated founder Sujal Patel in 2007, and he managed to bring the company to its first profitable quarter at the end of 2009.

The acquisition, rumoured since October, will bolster EMC’s efforts back-end infrastructure for corporate data centres. Storage is an important component of the new generation of highly flexible data centres, in which applications are created and destroyed based on demand. Think of it like any major-scale Web site but internal to a particular business–a sort of corporate cloud computing. (Software virtualization is the enabling technology here, and EMC owns virtualization software leader VMWare.)

Corporate cloud computing has been a hot area for consolidation lately, with HP and Dell’s bidding war for 3PAR earlier this summer the most prominent example.

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