Teradata Warrants a Wait-and-See Approach
Data Engineer

Data warehousing and business analytics provider Teradata (TDC)  is in the midst of a business model transformation that it hopes will turn around its fortunes. The company reports fourth-quarter and year-end 2016 results on Thursday, Feb. 9.

On Nov. 19, Teradata held an analyst meeting to make its case before the investment community that its transformation will result in higher growth. Over the past few years the company has struggled to grow. Revenue declined 7.4% in 2015 and is expected to be down 10% in 2016, according to estimates. Management thinks revenue will down 5-10% in 2017.

Customers use Teradata's hardware, software and consulting services to predict business trends, improve customer satisfaction and increase efficiencies. Insurance companies might use Teradata to find the difference in risk between the best and worst drivers. Retailers might use Teradata to find trends in cash-register data. Verizon (VZ)  uses its Teradata data warehouse to create attractive offerings for customers that are profitable to the business.

Teradata's historical core has been data management, but it needs to extend out into faster-growing markets such as analytic tools, consulting and less-expensive pre-packaged analytics for smaller customers. More than 50% of the company's addressable market is the top-500 companies with gigantic data warehouses.

Data warehouses were once stored on the company's proprietary hardware, but today customers are demanding analytics across the public cloud, the private cloud, and the cloud hosted at Teradata. About 85% of Teradata's customers do not want to manage their infrastructure and are moving toward a managed cloud arrangement.

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