NCR and its Teradata data warehousing division will separate into two publicly traded companies in a move designed to better focus their respective business strategies, NCR said Monday.
Teradata, which makes enterprise-grade data warehousing software, and NCR have different business models and markets, said Bill Nuti, NCR's president and chief executive officer, in a statement. NCR's businesses include automated teller machines (ATMs) and retail point-of-sale (POS) technologies.
The separation will allow for a sharper management focus and better employee incentive plans, Nuti said. Teradata and NCR had effectively been running as two stand-alone businesses for several years, Nuti said during a Monday conference call with analysts.
NCR deliberated for some time over whether to spin off Teradata, but "we didn't feel Teradata was sound enough, really," said NCR Chairman James Ringler. "Only a few years ago, it wasn't making money."
In 2005, Teradata had revenues of $1.5 billion and an operating income of $309 million excluding pension expenses, NCR said.
Teradata was the sixth-largest vendor of data warehousing tools in 2005, holding 4.4 percent of the market, according to a research report from IDC released in August. Teradata held a 10.3 percent market share in the data warehousing management segment, where the business generates most of its software revenue, IDC said.
"Over the years, the company has maintained its steady focus on enterprise data warehousing within high-end data warehousing environments," IDC said in the report.
Once it acquires its new status, Teradata will focus on investing in its consulting services and applications while growing its list of partners, Nuti said.
Meanwhile, NCR plans to expand its efforts in self-service devices, which Nuti said are finding increasing adoption in the health-care, public sector, travel and gaming industries. The types of devices include automated deposit machines at banks and airport ticket kiosks.
Future acquisitions by NCR will be focused on smaller companies in the self-service area, Nuti said. "We think it's important to build out from an innovation standpoint a self-service platform," he added.
Once the separation of Teradata and NCR is completed in six to nine months, Nuti will head up the smaller NCR, while Mike Koehler, the current senior vice president of the Teradata division, will become president and CEO of Teradata.
The division must be approved by NCR's board of directors. Under the plan, holders of NCR common stock will receive Teradata stock, although the distribution ratio has not been determined yet, NCR said. The U.S. Internal Revenue Service must approve the transfer, which should be tax free for NCR shareholders, the vendor said.