NCR Corporation has announced its intention to separate into two independent publicly traded companies through the spin off of 100% of the company’s Teradata data warehousing business to holders of shares of NCR common stock. The transaction, expected to be tax-free to NCR and its shareholders, is designed to enable the two publicly traded companiesto better focus on their distinct customer base, business strategy and operational needs. Teradata had revenues of US$1.5bn and operating income (excluding pension expense) of US$309mn in 2005.

“This separation is a logical strategic step for NCR. We believe it will benefit our customers, business partners, employees and shareholders,” says NCR president and ceo Bill Nuti. “Teradata and the new NCR operate in different markets each with solid prospects for the future, but they have markedly different business models. Both new companies should benefit from sharper management focus on their unique business opportunities.”

The NCR/Teradata stock distribution ratio will be determined at a future date. The spin off is expected to be completed in six to nine months, subject to registration of the new security with the Securities and Exchange Commission and certain other customary conditions.

The split gets the thumbs up from the Ovum consultancy in its EuroView Daily Comment service. “This is a logical step that will enable the two companies to better focus on their respective product strengths and which will be good for end-user organisations,” ventures senior analyst Mike Davis. “This is not an unexpected move for whilst NCR and Teradata have many customers in common, the respective decision makers for the products are different. Clear and distinct messaging will be important to drive future growth. For example, this split will leave the rest of NCR to focus on the financial self-service and retail store automation markets. Ovum believes that this is a good move for both organisations and demonstrates a very positive attitude to generating new business, particularly in Teradata's data warehousing markets.”
John Williamson