The tax-free spinoff, which sent NCRs shares up as high as 7 percent in heavy trading Jan. 8, will produce two publicly traded companies: Teradata and NCRs central business of making and selling banking equipment and retail checkout systems.
The split will benefit both parties, said a spokesperson for NCR, based in Dayton, Ohio.
"Teradata and the new NCR operate in different markets, each with solid prospects for the future. But they have markedly different business models," said NCR Chief Executive Bill Nuti. Nuti took over in August 2005 after Mark Hurd left to run computer maker Hewlett-Packard.
Teradata sells data warehousing software, which is used to comb vast amounts of data to analyze retail buying patterns and other types of business trends. It had sales of $1.5 billion and operating income of $309 million in 2005, and has had the most sales of any data warehousing provider in the world during the last few years. The divisions revenue rose 5 percent to $378 million in the third quarter.
NCRs core business sells automated teller machines, retail checkout equipment and other specialized computer systems. It rang up sales of $4.5 billion and operating income of $251 million in 2005.
"Creating two separate companies should strengthen business prospects for both," Nuti told Bloomberg News. Teradata will better be able to pursue orders against software rivals, including IBM, Oracle and EMC, the company said. Mike Koehler, who has been running the Teradata business, will become its CEO.
Jit Saxena, CEO of data-warehouse appliance maker Netezza—a key Teradata competitor—told eWEEK that the split into two companies will be good for the data warehousing industry as a whole.
"Anytime you have good, pure-play companies competing in the marketplace, thats good for the customer," Saxena said, in Framingham, Mass. "Now we have one more good one. This means more innovation, and this is good in the vibrant data warehousing marketplace we have now."
Saxena, whose 6-year-old global company makes the Netezza Performance Server (server, storage and database architecture integrated into one system) for such clients as Amazon.com, Capital One Services, Cingular Wireless and Neiman Marcus, said the marketplace he sees now is shifting very quickly, given that reports that used to be made weekly or monthly are now done daily or hourly.
"Companies are requiring much more detailed recent—if not real-time—data to run their businesses," Saxena said. "This is requiring companies like ours to keep coming up with new ideas." The renewed competition from a newly freed-up Teradata should also encourage innovation, Saxena said.
NCR, once the biggest U.S. maker of cash registers, was founded in 1884 as National Cash Register. The company controlled 90 percent of the U.S. cash register market in the 1920s. It made computer networking equipment in the 1990s and was bought by AT&T in 1991. NCR picked up Teradata in an acquisition after the AT&T purchase, and then AT&T spun off NCR in 1995.