Teradata Wins New Customer - Analyst Blog

A leading provider of Enterprise Data Warehousing (EDW) solutions, Teradata Corporation (TDC) and SAS, the premier provider of business analytics software and services announced that INPS (Italy's social security agency) has selected a combined Teradata and SAS enterprise data warehouse (EDW) and analytics system for healthcare-related fraud detection.

INPS has deployed Teradata and SAP AG's (SAP) new system that includes software, hardware and services, which will help INPS fulfill the need for detailed data and analytical business insight, reduce costs and add efficiencies.

Teradata also has a long standing partnership with SAS. Therefore, new customer wins and strengthening relationships with large vendors will be the source of revenues and profits, moving forward.

With the competition intensifying in the data warehouse appliance market, Teradata has been introducing new products at regular intervals. While historically, the company has introduced high end products consolidating multiple databases into one platform (such as the EDW platform) to hold up against competition and increase market share, the company has also been launching new low cost offerings to penetrate the mid-tier database market.

The new cloud computing initiative, the Teradata Enterprise Analytics Cloud, will further drive growth. Teradata continues to invest in R&D expenses, which were $117 million in fiscal 2009, up 8.3% from the 2008 levels and in line with the company's expectation. For 2010, the company plans to increase its R&D investments to $150 million.

INPS detects the highest possible occurrence of noncompliant behavior in terms of prognosis accuracy, whether by companies or individual claimants. This requires software-based investigation, involving masses of dynamic data to analyze sickness certificates and medical inspection details.

Therefore, Teradata's data warehouse combined with the SAS analytic solution will enable INPS customers analyze multiple terabytes of detailed data for health insurance claims, patient experiences, doctors, hospitals, treatments and procedures.

We anticipate that Teradata's long-term growth will come from new strategic partnerships. Teradata has long-standing relationships with large organizationssuch as Microsoft Corp. (MSFT), Oracle Corp. (ORCL) and International Business Machines Corp. (IBM).

Teradata's third quarter 2010 EPS and revenues beat the Zacks Consensus Estimates. Based on new customer wins, better operational execution, strong first nine months' results and a robust pipeline, the company raised its full year 2010 guidance.

Estimates for the full year 2010 and 2011 are up, attributable to better-than-expected results, improved traction from sales force expansion, new products and alliances, market share gains and a growing database analytics market.

However, higher R&D expenses and a greater number of competing products in the market would result in a continued pricing pressure, thus limiting margin expansion and pressurizing bottom line.

We maintain our long-term Neutral rating on the stock. Currently, Teradata is a Zacks Rank #3 stock, implying a short-term Hold rating.

 
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