Data Domain Inc. (DDUP) has only been publicly traded since June 2007, but company executives are showing wisdom beyond their years in manipulating the bidding war between NetApp Inc. (NTAP) and EMC Corp. (EMC)

Of course, in Data Domain's case it helps to be the owner of potentially game-changing data storage technology and be wooed by the small but enthusiastic NetApp and the hungry and deep-pocketed EMC.

However, Data Domain's recent moves have earned high marks from observers, with one analyst calling it an "excellent strategy." Data Domain executives appear to have positioned the company best for a higher offer, while still being mindful of the company's legal obligations.

All of which is why the Street seems so confident that Data Domain will receive an offer above the currently agreed-upon deal with NetApp that values the company at $30 a share. Data Domain shares - up more than threefold since March - closed Thursday up 24 cents to $32.78.

Initially, Data Domain's actions may have raised some eyebrows. Late Wednesday, Data Domain announced a revised acquisition agreement with NetApp, which was offering the same $30-a-share amount as EMC but in cash and stock, a payment method generally viewed as less attractive than EMC's all-cash bid.

Then on Thursday, Data Domain put out another press release saying its board is reviewing EMC's offer, hasn't made a decision about that offer but is still recommending the NetApp deal.

Observers note the beauty of Data Domain's decisions is that by accepting the perceived weaker deal, it pressures the more affluent EMC to come back with a higher offer. The smaller NetApp is less likely to raise its offer. In addition, by staying connected with NetApp, Data Domain keeps the perception of being a willing and loyal partner.

EMC, for its part, has said it considers its current all-cash bid already as superior. The Hopkinton, Mass., tech giant could hold firm and not raise its bid, hoping that Data Domain shareholders prefer $30 cash vs. $30 of cash and NetApp stock.

However, that's a tough sell, especially as Data Domain shareholders already can get more in the public market. The expectation is that EMC, which has billions more in holdings than NetApp, will raise its offer.

Meanwhile, Data Domain's decision also allows it to avoid accusations of not being a willing partner in a merger agreement.

Recent court decisions - including one involving chemical makers Hexion Specialty Chemicals Inc. (HXN) and its acquisition target, Huntsman Corp. (HUN) - have penalized those companies perceived to get weak knees or seek to back out of definitive merger agreements.

If Data Domain jumped into EMC's corner, NetApp could have held up the deal in court by arguing that Data Domain was breaching their agreement. Data Domain would then find itself in a legal bind.

Data Domain is the subject of these offers because the Santa Clara, Calif., company is a fast-growing player in the data storage market with its newly popular data-archiving technology known as de-duplication. The technology removes duplicate copies of information from the storage servers of corporate data centers, freeing up more space.

Of course, there are other - less capitalistic - reasons why Data Domain could side with NetApp. Both companies are from the Silicon Valley area and have similar cultures, and Data Domain could be afraid of losing power and stature within the much larger EMC.

However, if that's the case, Data Domain's moves are also serendipitous because they were probably the most prudent strategic decisions.

Peter Bussi of JMP Securities said he expects EMC to counter, as EMC isn't in a position to back down "because it essentially revealed that it doesn't believe it can address the market completely with its current deduplication offering."

Some have estimated that the final price on Data Domain could be as high as $35 a share, and most see EMC acquiring the company. EMC certainly could afford it, while a bid from NetApp in the high $30s could be risky, and wouldn't be an all-cash offer.

So Data Domain and NetApp wait for a move from EMC - not a bad position for Data Domain in this M&A battle.

-By Jerry A. DiColo, Dow Jones Newswires; 201-938-5670; jerry.dicolo@dowjones.com