Updated from 12:42 p.m. EDT

Shares of

StorageNetworks Inc.

(STOR) - Get Report

fell Thursday after the company reported that, despite a sharp jump in revenue, its net losses continued to grow in the second quarter, increasing ten-fold from the same period a year ago.

The Waltham, Mass.-based data storage company reported a second-quarter net loss of $31.3 million, or $1.20 per share. StorageNetworks lost $3 million, or 12 cents per share, in the same period a year ago.

Still, the company's current losses were lower than analysts had expected. The consensus estimate for StorageNetworks's second-quarter losses was $1.35 per share, according to a

First Call/Thomson Financial

survey.

"The company has been very upfront about their intentions to build out the infrastructure. No one was looking for the same losses as last year," said

Laura Conigliaro, an analyst at

Goldman Sachs

. "What's important is for the company to continue to build up its business without having losses get out of hand."

Indeed, revenue at StorageNetworks increased significantly from the same year-ago period, rising to $8 million from $440,000 in 1999. The company also expanded its customer base by 71%, adding such clients as

Juniper Networks

,

Credit Suisse First Boston

, and

FleetBoston Financial

in the last quarter.

Still, the company's continued net losses weighed heavily on its stock price Thursday, with shares finishing down 9 5/8, or 7%, at 130.

StorageNetworks's stock price has fluctuated wildly since its IPO on June 30. The stock skyrocketed 234% to close at $90.25 a share on its first day, after reaching an intraday high of $100. Less than a week after its introduction, shares slipped to a 52-week low of $82. But the stock bounced back to set a new 52-week high of $154.25 last week before slipping slightly.

"We're still dealing with a very young company," said Conigliaro.

The analyst said competition in the computer storage data market has increased since the company's inception. Still, StorageNetwork boasts a "first-mover advantage" as it was the first to offer such specialized services and has already built up a strong customer base.

Conigliaro remains positive about the company's prospects, initiating a stock rating of "market outperform" two days ago. Goldman Sachs helped underwrite StorageNetworks's IPO in June. Conigliaro does not have a target price for the stock.

StorageNetwork's customers pay a fee to connect their computer systems to its global data storage network, allowing them to store and access their data in an arrangement similar to the way companies set up and use telephone services such as voice mail.