Thread regarding Teradata Corp. layoffs

Acquisition of Teradata

This is a repost, it was on one of the theads, listed as a reply: Here is a theory on selling TD.

  1. The CEO to be has left, perhaps he didn't want to sell the business, perhaps he was too aggressive, we will probably never know and is replaced by an interim CEO whose main role now will be to negotiate the sale of TD.

  2. There will now be a lot of companies coming to look at us. If a deal can be done quickly then I don't think there will be any more layoffs right away. If no deal can be reached quickly then in 6 months I'll bet there is another very large round of layoffs as the company shutters what it can't sell to make the rest of TD look more appetizing.

  3. For a shareholder, the most appealing part of TD is the stake TD has in HortonWorks. Its quite possible that the company attempts to sell off all its main businesses including the Data & Analytics Division. This would leave Teradata proper as an investment business with stakes in other businesses. In case of a buyout this is the most profitable strategy for the executives.

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many of points are pretty sound definitely TDC needs to be more agile to changing trends mapreduce was one, spark is another but also needs to make itself more profitable as well - and just having the latest open source stuff won't do that tho

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-- the Spark science experiments on github done by geeky undergrads don't count when you're talking to bank or telco directors

Interesting to see that hubris is still part of the TeraData DNA. It was this exact mentality that made TD miss the Hadoop bus.

The half-assed UDA strategy came around in mid-2012 and it was already too late by that point. Clearly, TD is doing the same thing with Spark. Something's never change.

With the new severance pay rules in force, i am glad i left a year ago.

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Some smart thoughts here, but they also need some further thought.

TD is expensive - yes, and it looks like the cost structure is getting "shredded" now. The risk as in many company restructuring is TDC loses good people in the process. I think it's already evident that this is happening. Fortunately in many cases some good people stay as well.

Slow to Hadoop - yes, but that's past. TD is playing catch up quickly. The Presto and Aster strategies are not in conflict at all (or "redundant" as said) - Presto is about running high-speed queries while Aster is about analytics. Also the Listener and IoT play could make up for this, none of TD's peer group have a solid prop for IoT so there's still a chance to grab it.

Private equity - just like what happened to INFA it's a good possibility. It might not be a bad thing because apart from extra cash, TD might benefit from stronger and more forward thinking board members. The downside is if any Mickey Mouse hedge fund or VC gets on board and starts steering TDC into many directions just to pump up valuations.

Analyics - agreed, and I think the consulting plays like Think Big, Lancet, Clara, etc. are a good step in this direction. Actually TDC has a lot of analytics talent especially outside the US - many of the International PS and sales folks came from SAS fallouts. (yes they have problems too - and worse) so there's probably already some deep seated motivation in the organization to help TDC take the analytics market. But yes there should be serious investment in this space. TDC should buy a BI company.

Cloud - is not just a trend, but missed the point. TDC will never be AWS - and the margins in software only databases are tiny. So it's good that TDC is finally serious in Cloud, but the economics need to be studied. This may also mean TDC starts going down the mid-market enterprise market which is more cutthroat compared to mega majors. In many countries, the strong verticals for TDC such as Telco and Banking are also constrained by regulatory challenges to move data into cloud - so TDC's should leverage its strengths in hardening and data governance to make cloud more palatable to customers.

In-Memory - This is not an oversight, it's actually a smart move. The "me-too" mentality is SAP and IBM's strategy (Hana, Spark on Mainframe? Please.) - and both have a long list of sad disappointed customers. If and should TDC get noisy about in-memory, it will be because it's solid. (Sorry - the Spark science experiments on github done by geeky undergrads don't count when you're talking to bank or telco directors).

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I've been a veteran of many tech re-orgs myself. It's always murky during times of change. It's easy however to pin blame on TDC management and "old boys club" - but let's face it, the changing market has slammed many players too. Back in the 90s, the market thought you sucked if you used an Apple - and many of the problems of Apple were the same as TDC now - but after the change, rather than playing catch-up Apple chose to remain in the markets where they were strong (Macs for education and creative content) and with later innovations (iPods and iPhones) started attacking markets they were never thought of playing in later. The same strategy could work for TDC.

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very well said!

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Spouse works at TD, I do not. However, I work at a large company (much, much bigger than TD) that is moving to Hadoop. The investment TD could have done 10 years ago is virtualization. We now create databases on the fly and no data movement is necessary. THAT is the future. Whether Denodo or Cisco (Composite), we now have a new way of handling that is far more efficient, faster, more secure, much easier to manage. Since the data landing place is not as important, we can migrate systems with no downstream impact.

Hardware gets cheaper and the new Intel/Micron announcement on 3D Xpoint is a game changer. Analytics are huge, SAS is too expensive. Complete landscape refresh happening. At this point, TD will be devalued to software/consulting so the multipliers are going bye-bye.

TD used to be leader but they lost the mindshare and way overcharged, similar to SAS/SAP. Now they will be eaten away on the edges. AEs and execs spending ridiculous amounts on expenses to sell way over-priced hardware. How does TD justify $10-$20M systems when I can configure a consumer system with almost same specs on Newegg at a fraction of the cost? Sure, commercial systems are better but the hardware is moving at such breakneck speeds that the added reliability is not worth the exorbitant costs. Throwaway blades in a cloud.

Why is TD so expensive? So you can pay the costs of a high-touch sales model.

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Goldman does not think so.

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who would want to aquire TD

Private-equity suitors look for highly cash-generative businesses because they can use the money to pay down debt that financed a Leveraged Buy Out. Teradata generated about $127 million of free cash flow on average in each of the past 10 quarters. The measure refers to the cash that’s left after deducting capital expenditures, such as equipment upgrades etc.

In short, the company is a prime candidate for a LBO given the cash it throws off.

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I have a hard time figuring out who would want to aquire TD. Legacy aging technology with little innovation, decreasing earnings / losses. Tons of baggage. Processes stuck in 80s. Hard to integrate into an existing culture. Maybe at $1B?

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company is trying to do too little in many things and not enough in a few. bought aster, then nothing. bought aprimo, bought e-circle, then selling it. bought hadapt, then nothing. invested in Horton, then nothing. got listener, then...? maybe the theory is correct - company has been trying to be a tech trader instead of a true tech leader.

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+1 definitely agree on the need for more analytics. Boxes are a hard sell to anyone but IT managers - and they usually buy based on price. Getting more analytical apps bundled makes it easier to pitch to business buyers who more often control the budgets in clients these days. For instance, SAS folks pitch to business all the time and close deals even if their architecture leaves IT with headaches. In-memory stigma? Check out Hana. In fact back to the point, many companies continue to buy SAP's substandard products for one reason alone: the ERP applications that run on them. The lesson with SAP and SAS: even bad technology sells if you have applications. Applications are what make data platforms more believable. It's a shame Teradata is selling theirs instead of making more.

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What is Langos up to these days with a new COO announced?

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- great post - I guess you figured out formatting on too.

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Get back to work plebes....

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Good discussion, this.

Cloud? It's is a sexy trend, and putting TD on AWS is ok for presence but the real revenue is still with the enterprise boxes and this is where Teradata really shines

  • The Cloud is a trend.Really.Lets talk numbers.Logging $2.09 billion in its latest quarter, AWS is on a $8 billion run-rate, booming 78% year over year. So, if AWS were a standalone company, what would it be worth?

At current multiples, roughly $70 billion. That number comes from The Wall Street Journal's financial editor, Dennis Berman.

Who are AWS customers? "Only" the largest telcos,banks,retailers,internet companies on the East Coast. The one commonality among all of these customers is they are forward looking companies. We are stuck with the laggards or parts of the organization that are unable to move to the cloud, just yet.

  • Re: our competitors, MS and IBM have significant and serious cloud investments. From all indications IBM is due to have another Big Resource Action(IBMspeak for layoff) in the next quarter ultimately costing the company up to 30,000 heads in their "legacy" GTS division. The BIG PICTURE will continue to be IBM committing to cloud and making necessary changes to go with that. MS has similarly poured money into Azure extending it onto non-Windows O.S and pitching it as a first class citizen in the Analytics space.

  • The drop in value of Teradata is a result of our inability to understand the innovations happening in this space. We have become too complacent, fat and lazy to see what is obvious to everyone else in the market.

Hadoop, they should get Horton to do some market moving innovations in this space.

  • We do not control Horton, its only a 6% stake. With regards to Horton's ability to innovate, they are more of a marketleader than we are and lets not forget the original Yahoo Hadoop team is with Horton. There is also the small fact that the ex-president of TD Labs left to become the CTO of HortonWorks. If nothing else, HW now has the same "market visionary" who led the TD DWH.

  • Presto meanwhile has nothing to do with Horton.

It's good that they have put Listener out there a few months ago

  • Listener,too little,too late,misguided and soon to be irrelevant. For proof, i only point to the 4 or 5 other products that we have acquired or built recently. Management does not know what to do in this space, so it tries everything before abandoning it.

so it's good to avoid that stigma

  • In-memory is not a stigma or a golden-egg. It's another tool to be used and no Teradata Intelligent Memory is not an answer to this.

the integration of any of these vendors is still inferior to what TD has positioned with their Aster-Teradata-Hadoop architecture

  • All the other "traditional" vendors are struggling as well except they are far larger,have diverse offerings and with deeper pockets. So when the music stops we will have to be first ones to get off.

TD should pick up the pieces, leverage where its strong, and strike back with a vengeance

  • Good sentiment and wishful thinking, it ain't gonna happen with this management.
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What negative in-memory stigma are you referring too? Spark is growing like crazy.

Which analytic tools do you think are good? Are there any good ones to run on TD?

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Meanwhile, if TD is really dumping marketing apps, let's see what's to be done in the "Data and Analytics" business:

On Data: TD should keep it's leadership in this space clear and ahead of their peers. Some of the directions lately:

  • Cloud? It's is a sexy trend, and putting TD on AWS is ok for presence but the real revenue is still with the enterprise boxes and this is where Teradata really shines - no Oracle/IBM/SAP/Microsoft technology can really hold a candle to the Teradata EDW - and it will take time for Hadoop to truly eat away at this market. Keep those boxes running well. The big serious companies still need them.

  • Hadoop? The stake in Horton is only as good as their ability to innovate - so far they are not visibly moving the Hadoop market at alI vs. Cloudera or MapR - so if TD wants to be taken seriously in Hadoop, they should get Horton to do some market moving innovations in this space - not just playing "me too" in the Hadoop game. Presto could be interesting but there should be a clear strategy on it otherwise it could confuse the market (see reference to Aster below).

  • Internet of Things? It's good that they have put Listener out there a few months ago - but it's still early days for that market.

  • In-Memory? SAP is already sucking badly with Hana - so it's good to avoid that stigma - but Teradata should also have its token answer to the in-memory trend, even if it's also hype-filled.

Analytics: Firstly: what analytics? TD does not do analytics. They definitely support the execution of analytics, but they are not top of mind. When people want to do analysis - they call SAS (although once they get fed up with SAS, TD occasionally gets a call to save the day). Not that SAP or Oracle are any better either (in fact they suck at analytics - but hey they don't claim to be analytics companies like TD does).

If Teradata wants to be taken seriously in Analytics, they should start putting money visibly in analytic innovation. The Aster acquisition would have been a good place to start, but there's very little innovation since then - TD just cannibalized Aster to add to the Teradata RDBMS and now is offering Aster's libraries on Hadoop - and the recent development in Presto actually renders Aster's role in the Hadoop ecosystem redundant. Maybe TD should floor the gas on Aster - beef it up to compete with the likes of SAS - or better, merge with a BI/Applications provider (e.g. Tableau, Qlik, RapidMiner) which will not only put fact to the fiction but also enhance the marketability of the enterprise data platforms. To TD peers: Oracle, SAP, Microsoft all have horrible analytics tools - and while IBM is stirring hype with Watson and Spark - the integration of any of these vendors is still inferior to what TD has positioned with their Aster-Teradata-Hadoop architecture. Just add finally add real analytics as the icing and go back and shred the market like it was supposed to.

On the aforementioned theory:

Stripping TD down to a holding company for investments would be an even dumber move (not that dumb moves have been in short supply). The key to survivability in this game is differentiation - what can TD do better than others. Their peers are getting by on pure hype sometimes and few companies like Teradata have a long list of customers who are actually HAPPY to talk about their experience. TD should pick up the pieces, leverage where its strong, and strike back with a vengeance and corner the market they claim to have: Data AND Analytics.

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