DataDirect Networks, a Chatsworth, California-based data storage company, plans to go public in nine to 12 months if the markets are stable, founding CEO Alex Bouzari said.

Once volatility in the public markets subsides, DataDirect could fetch a valuation of 3x to 4x revenues, Bouzari said in an interview. DataDirect has been profitable for the past four years, with revenues exceeding USD 100m in 2007 and operating income "in the high teens", he said.

DataDirect began to work closely with Merrill Lynch in the second half of 2008, and also has relationships with JP Morgan and Citigroup. The company, which specializes in storage systems for unstructured data, has not retained a banker for the IPO.

Founded 10 years ago, DataDirect raised funding from VCs in 2001, then bought out the investors between 2004 and 2007. Bouzari and co-founder Paul Bloch now own a majority stake, with the remainder held by company employees. Being privately-held, DataDirect does not feel pressure to go public soon, and will wait to see a few success stories before launching its own offering, said Bouzari.

With more and more unstructured data being created in the form of email attachments and new media, expertise in storing unstructured data is becoming increasingly important, Bouzari said. With more than 160 petabytes installed worldwide, DataDirect can scale to high levels of capacity and throughput, and is therefore able to meet the high demands of clients such as Microsoft Xbox Live and NASA. DataDirect's storage systems take up about one-third of the space of traditional storage systems, he said.

Over the past three quarters, DataDirect has received an unusually high level of interest from a variety of suitors. "We try to steer those relationships into OEM agreements and reseller agreements," Bouzari said. "Everybody is starting to see the unstructured data market as being potentially a big one," he said.

Potential acquirers of DataDirect are storage companies such as EMC of Hopkinton, Massachusetts; NetApp of Sunnyvale, California; and LSI Corporation of Milpitas, California. Others include systems integrators like IBM of Armonk, New York; Dell of Round Rock, Texas; Hewlett-Packard of Palo Alto, California; and Sun Microsystems of Santa Clara. "The closer you get to providing a complete system, the stickier it gets," he said to describe why these companies could be interested in DataDirect's storage technology. Storage vendors are more inclined to want to own new storage technology than integrators, who may be content with partnering, he added. DataDirect has OEM partnerships with IBM and Dell.

DataDirect is growing at an annual rate of about 30% and has a goal of reaching USD 500m in the next four to five years. "If something comes up along the way we will consider it but we are very focused on continuing to scale," Bouzari said. DataDirect will look at making acquisitions after it goes public, and plans to look for targets in application enablement and enterprise software for unstructured data.

DataDirect has in-house legal counsel and also works with law firm Manatt, Phelps & Phillips. DataDirect hired accountants Ernst & Young 12 months ago to prepare for a public offering.