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NCR To Spin Off Teradata Later This Year
NCR said Teradata earned $309 million on $1.5 billion in revenues, up 9%, in 2005
Jan. 12, 2007 09:15 PM
NCR said Monday that it's going to spin its Teradata data warehousing business off into a publicly traded company.
When exactly depends on board authorization, an IRS ruling, SEC filings and the usual IPO preparations, but it won't be for another six-nine months.
During a short conference call, NCR, which came close to ruination when it was acquired by AT&T 15 years ago, said it has been teasing with the idea for "many, many, many quarters" but was hamstrung by the fact that the unit wasn't making any money. That situation apparently brightened a year ago. NCR said Teradata earned $309 million on $1.5 billion in revenues, up 9%, in 2005.
The two entities share infrastructure costs but Teradata has been run as a standalone concern for a few years.
Teradata owns roughly 8% of its market behind Oracle, IBM and SAP.
The Teradata Division's current senior VP Mike Koehler will run the spinout as president and CEO.
The Teradata board and the rest of its management team have reportedly yet to be decided. The stock distribution ratio is also a work-in-progress. JP Morgan Chase will advise.
NCR reasons that it and Teradata are in different markets with different business models and figures that both could benefit from sharper management focus, pursuing their own growth and R&D agendas.
The move will leave NCR, HP CEO Mark Hurd's old turf, selling ATMs, self-checkout systems, automated bill payment systems and airline, hotel and hospital self-checkin/out kiosks and it plans to focus on its other businesses like retail POS technologies, printer consumables and checking processing and imaging, a "Back to the Future" profile reminiscent of its original cash register charter a 100 years ago.
Shed of Teradata NCR will be a $4.5 billion company with an operating income of around $251 million.
It said it believes it can expand its earnings and cash flow in the self-service market and without the database have more money to invest in its sales force but Teradata may claim the lion's share of the value because its shot at growth is better.
Once separated both companies are expected to make targeted acquisitions.
Wall Street was happy with the decision.
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