Teradata plunged Thursday to a six-year low, and there's one investor who's not sweating it.
Matrix Asset Advisors sold out of its position in the struggling maker of big-data software last quarter after the firm's calls for the company to explore a sale fell on deaf ears. ``They weren't ready to do the things that we thought they had to do,'' said Matrix Chief Investment Officer David Katz.
So Matrix and Katz were spared the disappointment when Teradata slumped 14 percent after slashing its revenue guidance -- again -- for 2015. Teradata now says sales could drop 8 percent this year, which would be the biggest decline ever.
With today's drop, the $3.6 billion company is now trading at about 1.4 times its sales in the last year -- a more than 60 percent discount to the median of its U.S. peers. It hasn't been this cheap since the throes of the financial crisis in 2009.
Enough is enough. Going it alone just isn't working. Teradata's revenue has been pressured as corporations postpone investments in data analytics to evaluate new approaches such as Hadoop, which manages unstructured data such as tweets and videos. Companies have also been fueling more IT dollars toward protecting against cybersecurity threats, which means less room in the budget for other technologies.
While Teradata is projected to start growing revenue again in 2016, it's hard to bank on that for a company that's repeatedly missed estimates and cut guidance. Even if sales rebound as much as analysts are currently forecasting for 2016 and 2017, the gains won't be enough to compensate for this year's decline.
In the right hands, though, Teradata could do a lot better. Its technology is more of an old-school approach to big data, but its products are still in high demand and used by some of America's biggest companies, such as Coca-Cola and Procter & Gamble. That kind of customer list is valuable to a software company looking to stake out a bigger share of the big-data market.
Cisco, Oracle and IBM have all been speculated as possible bidders. Private-equity firms have also shown a liking to aging technology companies, with Compuware, Tibco Software and BMC Software all going to financial suitors.
Teradata is now the third-worst performer in the Standard & Poor's 500 Information Technology Index this year. So it quite literally can't do much worse for its shareholders. There are no prizes for last place, and the company would be better off finding a buyer who can help investors recoup their losses with a takeover premium.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
To contact the author of this story:
Brooke Sutherland in New York at firstname.lastname@example.org
To contact the editor responsible for this story:
Beth Williams at email@example.com