Teradata: A Misinterpretation Of A Robust Quarter
@Teradata reported the results of its full-year and Q4 results last week. The company continued to over-attain prior consensus expectations. Some analysts were unhappy because the company sold too much in the way of product and perpetual license. Some analysts were unhappy with the projection of Q1 seasonality. Overall, the company’s turnaround is on track and gathering some momentum. TDC – some thoughts about its battle for relevance Last week Teradata (TDC) reported the results of its Q4 operations. Sadly, for the company, the results were reported on a day in which very few eyes were focused on the results of specific enterprises. The software index, the Nasdaq and the S&P, were all busy selling off in dramatic fashion that has lead to numerous headlines regarding the apocalypse or something worse. I think it can be a mistake to read too much into share price performance during the midst of a stock market correction. Investors, for the most part, are looking for reasons to sell and not reasons to buy. In the case of Teradata, what really ought to be viewed as a strong quarter, certainly relative to expectations, mainly served as an excuse to sell the shares aggressively. Part of that related to the syndrome of “buy the rumor, sell the news.” In this case, the shares had been upgraded by both Cowen and Morgan Stanley in the weeks before the earnings release and they had appreciated quite noticeably over the prior three months. All of those gains were wiped away in a couple of days of fevered trading that really had little to do with the company’s actual operational performance. Teradata shares have spent the last couple of years rising from a slough of despair. The shares made a low of about $23 at the start of 2016, in the wake of another of a seemingly endless series of operational miscues. Shortly thereafter, the CEO was replaced, and the company embarked on an operational turnaround. While the turnaround is still very much a work in progress, Q4 did mark the end of headline declines in reported revenues, which at $626 million were significantly above prior consensus expectations of $611 million. The company bettered prior consensus EPS expectations by a significant amount as well, after excluding the specific impacts of the new corporate tax law as regards to repatriation of overseas cash balances.