Feeds

Teradata rides big data wave in Q4, does better than expected

Which, if big data is all it is cracked up to be, shouldn't be possible

Beginner's guide to SSL certificates

Systems vendor Teradata is riding the twin waves of traditional data warehousing and new-fangled big data munching, and is doing a pretty good job positioning itself to stay relevant in an increasingly Hadoopy world. 

The company just turned in better numbers for the fourth quarter than Wall Street expected, but then Wall Street turned on Teradata and knocked its stock down by 7.1 per cent because the forecast for 2013 is not as rosy as it has been in the prior two years.

Teradata announced its results for Q4 before the market opened on Friday, and said that its product sales rose by 9.4 per cent to $362m, with consulting services revenues rising an even better 13.7 per cent to $224m. Maintenance services, which are the gravy money at most IT suppliers, were up a more modest 6.2 per cent in the fourth quarter, to $154m.

Add it all up, and Teradata raked in $740m in sales for Q4, up 10 points, and brought $112m to the bottom line, an increase of 14 per cent over last year's fourth quarter. That's 15.1 per cent of revenue, about as good as it gets for a software company that is reselling Dell iron to run it.

These numbers buck the pretty tepid revenue growth or modest declines that those in the core IT racket – we ain't talking about Apple here – have reported thus far in earnings season for 2013.

And perhaps more significantly, Teradata's EMEA business was up 24 per cent as measured in constant currency (21 per cent as reported) to $176m, in the starkest of contrast to the difficulties that IT suppliers are having in Europe these days.

Europe is doing so well for Teradata, in fact, that Herman Wimmer, general manager for the EMEA region, is now being given responsibility for the Asia/Pacific-Japan region.

For the full year, Teradata pushed just under $1.3bn in tin and software to run atop it, an increase of 15.6 per cent over the same figures in 2011. Consulting services hit $776m, up 11.6 per cent, while maintenance services brought in $592m, up 8.6 per cent.

All told, that makes $2.67bn in revenues for all of 2012, with $353m cascading down through the costs and expenses to pool at the bottom line, an increase of 19 per cent. That worked out to $2.44 per share of earnings.

So what is Wall Street's issue, which sent Teradata shares down 7.1 per cent for the day and knocked its market capitalization down to $11.3bn? It is hard to say for sure, but it looks like the forecast that Teradata gave for 2013 – revenues up between 6 and 10 per cent and earnings per share of between $2.64 and $2.79 – was not good enough. That is EPS growth of between 8.2 and 14.3 per cent, considerably better than revenue growth, but clearly investors wanted for Teradata to continue on a faster growth path.

Now you understand – well, you always did understand – why Michael Dell wants to take the company that bears his name private. Wall Street is like a mother-in-law that can and does tell you how to run your life.

Teradata ended 2012 with $729m in cash, a hoard that is $180m lighter thanks to acquisitions and share repurchases, and has $289m of debt on a term loan. It is in pretty good shape, but it is certainly not going to do any large acquisitions or blow a lot more dough buying back its shares than it is already doing.

It's certainly not going to do an LBO to go private as Dell is doing, either. Teradata only threw off $575m in cash flow for all of 2012, and it used $280m of that for buybacks and another $270m for acquisitions.

This seems pretty prudent as Teradata expands from a data warehouse system vendor to a multi-channel, multi-platform marketing expert (as IBM and Oracle are also doing through their acquisitions). This is about a whole lot more than complex ad-hoc queries.

Teradata has expanded its business not just through acquisitions, but by boosting the number of sales territories where it is peddling its wares, and putting feet on the street in those territories. In a conference call with Wall Street analysts, president and CEO Mike Koehler said that it added 49 new territories last year, up a bit from what it was going to do, and that since it started expanding its sales areas in the teeth of the Great Recession in 2008, it has boosted the count by nearly half to a total of 569.

The plan is to add 20 to 30 more territories this year, and some specialists to sell the Aster Data columnar and big data tools and the Aprimo and eCircle marketing products Teradata has snapped up in the past two years.

Still, Teradata thinks 2013 is going to be a bit tighter than many might have been expecting.

"Teradata had a pretty good run from 2010 to 2012 and there is no reason we can't continue these types of results longer term," Koehler explained. "But as we enter into 2013, some of the macroeconomic headwinds that we were not able to outrun in the second half of 2012 – especially in the Americas – are continuing."

Specifically, customers in the Americas are doing some belt-tightening, either deferring purchases or buying stuff in smaller increments. The first quarter will have some pretty tough compares for Teradata, which had 26 per cent revenue growth last year. The second quarter is not going to be an easy compare, either. But the thinking at Teradata is that after a few quarters of deferrals and belt-tightening, customers in the Americas region will loosen up and spend a bit in the second half. ®

Top 5 reasons to deploy VMware with Tegile

More from The Register

next story
IT crisis looming: 'What if AWS goes pop, runs out of cash?'
Public IaaS... something's gotta give - and it may be AWS
Linux? Bah! Red Hat has its eye on the CLOUD – and it wants to own it
CEO says it will be 'undisputed leader' in enterprise cloud tech
Oracle SHELLSHOCKER - data titan lists unpatchables
Database kingpin lists 32 products that can't be patched (yet) as GNU fixes second vuln
Ello? ello? ello?: Facebook challenger in DDoS KNOCKOUT
Gets back up again after half an hour though
Hey, what's a STORAGE company doing working on Internet-of-Cars?
Boo - it's not a terabyte car, it's just predictive maintenance and that
Troll hunter Rackspace turns Rotatable's bizarro patent to stone
News of the Weird: Screen-rotating technology declared unpatentable
prev story

Whitepapers

Providing a secure and efficient Helpdesk
A single remote control platform for user support is be key to providing an efficient helpdesk. Retain full control over the way in which screen and keystroke data is transmitted.
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.
Beginner's guide to SSL certificates
De-mystify the technology involved and give you the information you need to make the best decision when considering your online security options.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.
Secure remote control for conventional and virtual desktops
Balancing user privacy and privileged access, in accordance with compliance frameworks and legislation. Evaluating any potential remote control choice.