Teradata Partners Electronic Arts - Analyst Blog

A leading provider of Enterprise Data Warehousing (EDW) solutions, Teradata Corp. (TDC) announced a two year partnership with Electronic Arts Inc. (ERTS), a premier video game developer and publisher. 

Under the agreement, Electronic Arts will deploy Teradata’s complete Managed Services support, which is a part of its EDW platform. This partnership is one of the largest Managed Services agreements for Teradata in the U.S., the company pointed out.

 

The partnership will enable Electronic Arts to gain utmost advantage in terms of cost and efficiency from Teradata’s applications and EDW technologies. The contract covers production operations support for Teradata infrastructure, extract-transform-load processes and Teradata applications and retainer-based development for Electronic Arts’ new EDW-related projects.

 
By leveraging Teradata’s EDW platform, Relationship Manager (TRM) and Master Data Management applications and services, Electronic Arts will be able to provide advance customer support and business enhancing capabilities. Electronic Arts continues to maintain its innovativeness and the superior quality of its video games via increased partnerships.

 

The enterprise-class Teradata Master Data Management solution will be used as a key component by Electronic Arts to enhance data accuracy and corporate performance while Teradata's TRM tools for campaign management will allow Electronic Arts to effectively control data analytics.

 

We expect long-term growth to come from new strategic partnerships. We remain positive on Teradata’s partnership with Electronic Arts. Teradata also has long-standing relationships with large organizations such as Microsoft Corp. (MSFT), eBay Inc. (EBAY), Oracle Corp. (ORCL), International Business Machines Corp. (IBM), AT&T Inc. (T), SAP AG (SAP) and SAS.

 

Therefore, new customer wins and strengthening relationships with large vendors will be the source of revenues and profits, moving forward.

 

However, it appears that the greater number of competing products in the market would result in a continued pricing pressure, thus limiting margin expansion at Teradata. The company is up against increasing competition from much larger players such as Oracle, Netezza Corp. (NZ), IBM, Microsoft, Sybase and SAP in the same niche market.

 

Therefore, we believe that weaker revenues, higher costs and increasing competition could pressure performance in the second half of 2010.

 

We expect Teradata to deliver much improved results in 2011. We remain optimistic on the company as it is well positioned to benefit from the growing database analytics market. However, we would ask investors to remain on sidelines until the stock delivers improved traction from its sales force expansion strategy. We therefore maintain our Neutral rating on Teradata over the long term (6+ months).

 
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