Teradata Lays Another Egg

Teradata reports Q3 revenue of $606 million, down 3% in “constant” dollars, down 9% in actual dollars, the kind you can spend.  Product revenue, from selling software and boxes, declined 14%.

In a brutal call with analysts, CEO Mike Koehler noted: “revenue was not what we expected.”  It could have been a recorded message.

Teradata executives tried to blame the weak revenue on the strong dollar.  When pressed, however, they admitted that deferred North American sales drove the shortfall, as companies put off investments in Teradata’s big box solutions.

In other words, the dogs don’t like the dog food.

From the press release:

Teradata is in the process of making transformational changes to improve the long-term performance of the company, including offering more flexibility and options in the way customers buy Teradata products such as a software-only version of Teradata as well as making Teradata accessible in the public cloud. The initial cloud version of Teradata will be available on Amazon’s Web Services in the first quarter of 2016.

An analyst asked about expected margins in the software-only business; Teradata executives clammed up.  The answer is zero.  Teradata without a box is a bladeless knife without a handle, competing directly with open source databases, such as Apache Greenplum.

Another analyst asked about Teradata on AWS, noting that Teradata executives previously declared that their customers would never use AWS.  Response from the executives was more mush.  HP just shuttered its cloud business; Teradata’s move to AWS implies that Teradata Cloud is toast.

Koehler also touted Teradata’s plans to offer Aster on Hadoop, citing “100 pre-built applications”.  Good luck with that.  Aster on Hadoop is a SQL engine that still runs through MapReduce; in other words it’s obsolete, a point reinforced by Teradata’s plans to move forward with Presto.  Buying an analytic database with pre-built applications is like buying a car with pre-built rides.

More from the press release:

“We remain confident in Teradata’s technology, our roadmaps and competitive leadership position in the market and we are taking actions to increase shareholder value.  We are making transformative changes to the company for longer term success, and are also aligning our cost structure for near term improvement,” said Mike Koehler, chief executive officer, Teradata Corporation. 

In other words, expect more layoffs.

“Our Marketing Applications team has made great progress this year, and has market leading solutions. As part of our business transformation, we determined it best to exclusively focus our investments and attention on our core Data and Analytics business.  We are therefore selling our Marketing Applications business. As we go through this process, we will work closely with our customers and employees for continued success.

“We overpaid for Aprimo five years ago, so now we’re looking for some greater fool to buy this dog.”

In parallel, we are launching key transformation initiatives to better align our Data and Analytics solutions and services with the evolving marketplace and to meet the needs of the new Teradata going forward.”

Update your resumes.

During the quarter, Teradata purchased approximately 8.5 million shares of its stock worth approximately $250 million.  Year to date through September 30, Teradata purchased 15.5 million shares, worth approximately $548 million.

“We have no vision for how to invest in our business, so we’re buying back the stock.”

In early trading, Teradata’s stock plunges.

In 2012, five companies led the data warehousing platform market: Oracle, IBM, Microsoft, Teradata and SAP.  Here’s how their stocks have fared since then:

  • Oracle: Up 24%
  • IBM: Down 29%
  • Microsoft: Up 77%
  • Teradata: Down 61%
  • SAP: Up 22%

Nice work, Teradata!  Making IBM look good…

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