Data Electronics, a Dublin-based IT outsourcing firm, is in talks to buy the Dublin operations of US technology firm Inflow, which invested $10 million (€10.9 million) in an internet data centre just last year.

The discussions, which are at an advanced stage, would see Inflow's internet data centre and staff transfer to the Dublin firm, which manages IT and internet functions for corporate customers.

It would be the second acquisition by Data Electronics in the past six months following a collapse in the internet data centre industry. The Irish firm recently acquired the assets of Wolfe Group, a start-up company which ran out of cash amid the current downturn in the sector.

Inflow said this week it would phase out two US data centre operations in Irvine and Sacramento, California, as well as its Dublin operations to cut costs. The company is seeking to achieve positive earnings in the second quarter of 2002, according to a statement.

Inflow is the latest in a string of internet data centre firms either to go out of business or be acquired by competitors. 360networks, Cityreach and Worldport, which invested more than $200 million in facilities here, have all ceased operations.