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Standalone Teradata Thrives In Credit Crunched Market

by Maroushka Kanywani, Editor, Dashboard InsightWednesday, September 3, 2008

By Stuart Lauchlan, News and Analysis Editor, MyCustomer.com

Data warehouse firm Teradata has flourished since spinning off from former parent NCR, as reflected by its latest figures. How is the credit crunch boosting the data warehouse sector, and will Microsoft's latest acquisition challenge Teradata's future success?

Teradata (NYSE: TDC) is doing rather nicely as a standalone business, reporting an increase in profit and revenues year on year. The data warehouse maker, which spun off from former parent NCR, has reported second quarter revenue of $455 million - a 6% year on year rise - with net income of $69 million, up from the previous year's $49 million.

Mike Koehler, president and chief executive officer, said the strength of international business is countering a weak US market. Revenue in Europe, Middle East and Africa in the second quarter was $128 million, up 33% from $96 million generated in the second quarter of 2007. “Revenue growth was driven by a very strong performance in our EMEA region, where revenues were up 33% or 22% in constant currency and by our services business which grew 11% in the quarter,” he said. “Continued softness in the US resulted in our overall revenue growth being slightly lower than what we had expected.”

Customers are looking to data warehousing to reduce costs, a strong selling point in the credit crunch. “In these softer markets, we’re placing greater emphasis on helping companies reduce costs through data warehousing,” explained Koehler. “Consolidating data centres enables strong costs savings with reduced operating and support costs, while providing the benefit of a fully integrated data warehouse for better decision making in these tight economies.”

"Consolidating data centres enables strong costs savings with reduced operating and support costs, while providing the benefit of a fully integrated data warehouse for better decision making in these tight economies."

Mike Koehler, President and Chief Executive Officer, Teradata

But the firm continues to see good growth in the financial services market globally. “Financial services institutions are investing to strengthen their business intelligence infrastructure to operate with better precision and with less risk and lower costs,” said Koehler. “In the financial services industry, we had excellent revenue growth in every region in Q2 and we continue have good activity and are adding new customers. In early July, after the close of Q2, we announced HSBC as a new customer, one of the largest and most influential financial services institutions in the world. During the past four quarters we have now added as new customers the number one or number two largest banks in five of the top 15 GDP countries in the world. On a global basis, 9 of the 10 largest banks are now using Teradata.”

Healthy Database Market

Other sectors, such as utilities and retail, also racked up notable successes. “In the utility industry, we had a new account win with Xcel Energy, a company with over five million customers in the west and Midwestern US,” said Koehler. “Their new Teradata solution will allow Xcel to identify ways to maximize revenue recovery, reduce costs and improve customer satisfaction, and allows Xcel to manage the massive amounts of real time data being generated from their meters, billing and collection systems.

“We also generated good growth in the retail industry in Q2, particularly in EMEA where we had major upgrades including Metro and Otto in Germany, and upgrades at retailers here in the US such as Best Buy, Big Lots and Myers. Retailers continue to look to Teradata to help drive more efficient operations across their enterprises, such as optimising their supply chains and also to address new initiatives such as customer privacy. The travel and transportation industry also expands good growth.”

"Teradata moved to the number four position in the database market share worldwide, ahead of Sybase and behind Microsoft. We’re not seeing any increased competition from any particular vendors in the market."

Darryl McDonald, Chief Marketing Officer, Teradata

The quarter saw some changes to the competitive landscape for Teradata with Microsoft's (NASDAQ: MSFT)acquisition of DATAllegro, although the former does not see much threat from this move to date. “We are a strategic partner with Microsoft, we’re one of the partners that they go to market with with their business intelligence stack with a custom built adapter into Teradata. We’ll continue to go to market and support Microsoft from a business intelligence and analytical partnership,” argued Darryl McDonald, Teradata chief marketing officer. “At the same time, we did compete with them when Microsoft SQL Server would tried to compete with Teradata. I think with the acquisition of DATAllegro, that will continue.

“From our perspective, DATAllegro was not a big competitor in the market place. We hadn’t competed with them probably in the last two years in the market place. I think it’s probably a good acknowledgment that being able to scale into the 100s of terabytes in the enterprise data warehouse space is something that a lot of our competitors are aspiring to do. It’s something that Teradata does today. We’ll keep an eye on future announcements that Microsoft will make about DATAllegro, but as of now, we’ll support our strategic partnership on the business intelligence side and we’ll compete to head-on as it relates to Microsoft SQL Server and DATAllegro.”

The database market is also proving healthy. The recently released Gartner Dataquest report, which estimated 2007 market shares for relational database software companies, showed that Teradata grew share and achieved higher revenue growth in 2007 than the overall market. “There’s always competition out there from the major database providers,” noted McDonald. “However, Teradata is growing its market share. Teradata actually moved to the number four position in the database market share worldwide, ahead of Sybase and behind Microsoft. We’re not seeing any increased competition from any particular vendors in the market. It hasn’t been a challenge or an issue for us at this point in time.”

About the Author

Stuart Lauchlan is a freelance business and technology journalist with 15 years experience of writing about the technology, management and business sectors, both in Europe and the US.

For the past five years, he has been freelance, contributing to a variety of print and online publications on both sides of the Atlantic, including being a regular columnist/contributor for MIS magazine, editor of Outsource magazine and News Editor for MyCustomer.com. He is also a partner in media and editorial services consultancy Darksome Media - www.darksome.net. You can contact Stuart by email at stuart.lauchlan@mycustomer.com

Source: MyCustomer.com

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