Tera-Tom here! If you think you have financial woes imagine losing $10 million dollars a day, every day for 3 consecutive years, while your peers and competitors make enormous profits during that same period?
Over the past three years the NASDAQ is up 47.48%, however Teradata stock has spiraled downward by a shocking 59.88%. Over the last three months alone Teradata’s market capitalization is down 1.224 billion dollars.
Market Capitalization (Market Cap) is a measurement of business value that is based on share price times the number of shares outstanding. For example, if a company has 2 million shares outstanding at a share price of $30, its market cap is 60 million (2 million x $30). Market Cap represents the market’s view of a company’s stock value.
Three years ago Teradata’s market cap was nearly 13.75 billion and today it is 4.35 billion. The stock went from a high of $80.20 on September 7, 2012 to $29.78 just last week. Over the past three years Teradata has lost a market cap value that averages over 10 million dollars per day.
Three months ago, a New York City-based investment management firm sent an open letter to Teradata Corp.’s board of directors urging them to sell Teradata. Matrix Asset Advisors, a long-term, value-oriented investment manager, believes there is a “significant gap” between Teradata’s stock price and its actual worth, said David A. Katz, Matrix’s president and chief investment officer.
“We think they have a great technology, a great client base and a very good future if run properly, but we sense a lack of any urgency by management or the board to do better for shareholders and to capitalize on it,” Katz said.
Teradata Corp. TDC, was downgraded to market underperform from market outperform at JMP Securities, on fears investors are underestimating the company's competition. In a note to clients, JMP analyst Greg McDowell said Teradata's current valuation underestimates the difficulties the company is facing, and will likely continue to face over the next few years, with regards to the rise of alternative data platforms, such as Hadoop, Amazon Redshift and NoSQL.
In the Wall Street Journal (March 7th, 2015) a lead story in the business section was entitled "BofA Is Following Internet Companies Into the Cloud". The article explains how the banking giant began to consider ways to incorporate less-expensive hardware and new software into its own information-technology infrastructure.
David Reilly, chief technology officer at the bank stated, "The use of cheaper commodity computers with standard x86 chips and running a new generation of software will allow the bank to replace pieces of hardware with software, a process called virtualization". He went onto say, "When a bank discontinues a product or service, it will be better able to repurpose the hardware for another task instead of buying expensive new machines".
By 2018, BofA plans to have 80% of its workloads running on software-defined infrastructure inspired by Web companies. The process began in 2013.
Although the signs were quite apparent, what the management team at Teradata refused to acknowledge was a combination of legitimate parallel processing appliance vendors coupled with the invention of cloud computing. It is comparable to the taxi industry failing to see the emergence of Uber! Although layoffs have begun at Teradata, if I was the owner of a baseball team that lost every game I would first consider getting a new manager before I started cutting the players!