NetApp Annexes Spinnaker

Network Appliance Inc. (Nasdaq: NTAP) moved to pick up competing and complementary technology and engineering expertise today when it announced plans to acquire rival Spinnaker Networks Inc. for around $300 million in stock.

Sunnyvale, Calif.-based NetApp gets an advanced distributed file system architecture, cluster performance scaling, and what NetApp CEO Dan Warmenhoven calls a world-class engineering team.”

“This acquisition is primarily about engineering expertise,” says analyst Clay Sumner of Legg Mason Inc.

“Spinnaker has some of the pioneers in distributed file systems.”

For Spinnaker and its backers, the deal is a very sweet victory -- and the ultimate validation of its distributed NAS technology. Spinnaker has raised $51.4 million to date; its most recent funding was a $31 million second round in May 2002. Investors included Menlo Ventures, Norwest Venture Partners, Mellon Ventures Inc., and GIC Special Investments (GIC SI), the private equity investment arm of the government of Singapore (see Spinnaker Sails In With $31M).

Spinnaker was generating a little bit of revenue, but not enough to sustain the company over the long haul. Sources say the NAS startup had a run rate of between $4 million and $5 million per quarter -- clear evidence, it seems, that NetApp was interested in obtaining Spinnaker's software rather than knocking a competitor out of the box.