NCR split could boost Teradata

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NCR Corp.'s intent to separate into two independent, publicly traded companies through the spinoff of its Teradata data warehousing business to holders of shares of NCR common stock is good news for Teradata, analysts said.

The transaction will let the two companies focus better on their distinct customer bases, business strategy and operational needs.

"From my angle, Teradata was somewhat constricted within the broader context of NCR," said John Hegarty, a vice president at AMR Research Inc. in Boston. "Unleashing them to their own devices, be it as a public company or a division of an acquirer, will only be to their benefit in a big way."

In a conference call Jan. 8, NCR president/CEO Bill Nuti called the strategic rationale for separation compelling.

"NCR and Teradata are each major and attractive businesses, but they operate in different markets with markedly different business models," Mr. Nuti said. "NCR is focused on providing self-service technologies and related solutions while Teradata is focused on providing enterprise data warehousing solutions and consulting services in that space. The separation of Teradata from NCR will create two independent companies that are both market leaders, each focused on their separate businesses, customers and strategic initiative."

NCR will continue to provide self-service technologies, which include automated teller machines, retail self-checkout systems, automated bill payment systems and airline, hotel and hospital self-check-in/out kiosks. NCR also will focus on its other businesses, such as retail point-of-sale technologies and customer support services as well as business consumables and check processing and profitability.

Teradata is the leader in the enterprise data warehousing market. Its solutions let organizations worldwide gain a single, integrated enterprise view of their business to enhance decision making, customer relationships and profitability. More than 150 companies use its CRM application.

"The key is the ability to invest," said Sam Gragg, assistant vice president of Teradata customer management solutions marketing. "Last year we began to expand our customer portfolio. Up until now, it had been pretty much focused on direct marketing [applications such as] segmentation, analytics and campaign management. But a lot of companies are looking at a broader view of how you deploy analytics across the complete customer experience environment. So we began looking at how we could expand our portfolio, either through our own products or partnerships ... [and] this will help us as we start looking at how we want to invest."

Previously, he said, companies making a decision about these types of partnerships had to look at the big picture: NCR and Teradata.

"Now, they will only have to look at Teradata," he said. "It will make the investment decisions stronger and quicker."

The spinoff is subject to conditions including approval by NCR's board of directors and an Internal Revenue Service ruling. Approval by NCR shareholders is not required. The deal is to conclude in six to nine months.

After the separation, Mr. Nuti will serve as NCR president/CEO while Mike Koehler, currently senior vice president of the Teradata division, will serve as president/CEO of Teradata.

Mr. Hagerty said the split would let Teradata expand its portfolio beyond mainly high-performance database and related hardware products.

"[Teradata] has started to get into analytic models for certain industries and certain types of data within those industries," he said. "What I think they need to do is move up the food chain to be able to not just sell their wares to the IT buyer, but also really appeal to the business user, and I think this will allow them to move up that chain. In essence, it will give them more capital to be able to do acquisition and/or development. This will enable them to capture the hearts and minds of more people in their buying audience as opposed to just the IT people."

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