THE world’s oldest technology company, US-based
NCR Corporation, is preparing to spin off its lucrative
Teradata data warehouse and data mining business unit.
The company has not talked about a specific buyer for the unit, but said NCR and Teradata would be structured to operate as two distinct companies.
NCR was founded in the 1880’s as National Cash Register, originally making mechanical adding machines.
Though it has continually evolved in the past 120 years, the company has remained true to its roots, specialising in retail technologies ranging from automatic teller machines to automated payment terminals and retail point of sale systems.
The Teradata unit was acquired in the 1990’s when NCR was a owned by telecommunications giant AT&T. Teradata was and remains a specialist in enterprise class data warehousing and business intelligence applications used heavily in the massive retail applications – in particular in managing massive Customer Relationship Management issues for telecommunications companies, banks and other finance companies, and global retailers.
In total NCR generates annual revenues of about US$4.5 billion of which $1.5 billion comes from Teradata. The unit is the most profitable part of the company.
Though Teradata has been at the pointy-end of technology innovation and is considered by many to be the jewel in the NCR crown, it has long been considered an odd fit for the century old firm.
The company has spawned a slew of top executives, including Mark Hurd who was credited with turning Teradata into a profitable unit before moving on to first manage NCR and then to his current job as HP chief executive.
NCR president and chief executive officer Bill Nuti said the move was a logical strategic step for NCR.
“Teradata and the new NCR operate in different markets each with solid prospects for the future, but they have markedly different business models,” Mr Nuti said.
“Both new companies should benefit from sharper management focus on their unique business opportunities. Each new entity should be able to more effectively pursue their specific growth and research and development agendas, while designing employee incentive plans that are more directly aligned with their own performance and growth objectives,” he said.
“In addition, NCR investors should benefit from increased transparency and clarity, which will allow them to more appropriately value the merits, performance and future prospects of both companies.”
NCR believes there are opportunities to expand earnings and cash flow following the Teradata separation by continuing to leverage its leadership position in the emerging self-service market, further enhancing operational excellence, and securing additional manufacturing cost reductions and supply-chain efficiencies.
In addition, NCR expects to benefit from increased investment in its sales organization, which should further strengthen the company’s competitive position, market share and brand as it pursues self-service opportunities in new industry and geographic segments.
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