NCR to Spin Off Teradata Database Business

Automated teller-machine manufacturer NCR Corp. will split itself in two, spinning off its Teradata information warehousing business to shareholders. The two companies will trade publicly after the breakup, which should take six to nine months. The company states that the two businesses will function better separately: NCR will be able to focus on reviving growth in the bank-machine and retail checkout markets as well as newer opportunities like boarding pass machines, while Teradata will be able to compete more effectively against software rivals like Oracle. NCR shares rose $1.39 to $43.79 on the news, their biggest gain since November. In 2005, Teradata revenue rose 9% while revenue for the rest of the company fell 2%. Teradata, whose clients include Wal-Mart and Anheuser-Busch, uses specialized software to manage extremely large quantities of data. Teradata could ultimately become a takeover target for companies like Hewlett-Packard and SAP AG, which are boosting their software holdings as the industry consolidates.

• Sources: Bloomberg (I, II), Wall Street Journal
• Related commentary: NCR Plans Spinoff of Data Warehouse Unit (AP), NCR to spin off Teradata software business (Reuters). Conference call transcripts: Q3 2006
• Potentially impacted stocks and ETFs: NCR Corp. (NCR). Competitors: Diebold Inc. (DBD), International Business Machines Corp. (IBM), Oracle Corp. (ORCL). ETFs: PowerShares Dynamic Software (PSJ)

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