NCR’s Teradata Is a Speculative Buy

Article Excerpt

TERADATA CORP. $28 (New York symbol TDC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 180.5 million; Market cap: $5.1 billion; WSSF Rating: Average) provides data warehousing services to 850 of the world’s largest companies. Teradata’s computer systems and software helps these businesses capture, store and analyze a wide variety of data, such as customer buying habits. Identifying trends helps Teradata’s clients improve customer satisfaction and expand profits. The company was a wholly owned subsidiary of NCR Corp. (see box) until October 1, 2007. That’s when NCR handed out its Teradata shares to its own stockholders as a special dividend. NCR investors received one Teradata common share for each NCR share they owned. The dividend is a tax-free distribution. NCR stockholders will only have to pay capital gains taxes on Teradata when they sell the stock. Teradata’s revenue grew from $1.2 billion in 2002 to $1.6 billion in 2006. Earnings jumped from $57 million in 2002 to $206 million in 2005. However,…