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NCR to spin off data storage unit

Shares rise on plans to split the Teradata business from the making of ATMs and checkout scanners.

January 09, 2007|From the Associated Press

DAYTON, OHIO — NCR Corp. said Monday that it would spin off its data warehousing unit, resulting in two publicly traded companies: one that makes computers that store and analyze massive amounts of data and one that makes ATMs and checkout scanners for retailers.

NCR shares climbed 3.3%.

The spinoff of Teradata, which will take six to nine months, will allow each company to better concentrate on its customer base, business strategy and operational needs, NCR said.

"NCR and Teradata are each major and attractive businesses, but they operate in different markets with markedly different business models," said Bill Nuti, expected to continue as president and chief executive of NCR. "Creating two separate companies strengthens the business prospects for both."

Analyst Frank Gillett of Cambridge, Mass.-based Forrester Research Inc. said the move would enable investors to put a value on the companies separately.

"That makes a lot of sense to me," Gillett said of the spinoff. "I've never seen a lot of synergy between the two."

NCR shares closed at $43.79, up $1.39.

Mike Koehler, senior vice president of the Teradata division, will serve as president and CEO of the new Teradata.

NCR, based in Dayton, Ohio, has about 29,300 employees worldwide. Its products include automated teller machines, retail self-checkout systems, automated bill payment systems and airline, hotel and hospital self-check-in and checkout kiosks.

"The new NCR will have a strong commitment to the self-service market," Nuti said.

Nuti said Teradata would seek to expand its market. In 2005, Teradata accounted for $1.5 billion of NCR's $4.5 billion in revenue.

Companies use Teradata's data warehousing computers to get quick answers to complex questions about their inventories and other aspects of their business.

NCR said the spinoff was not expected to result in major changes in employment. NCR employs about 2,000 workers in Dayton. Teradata employees work in Dayton, Atlanta and San Diego and are expected to continue in those three hubs, NCR said.

The spinoff must be approved by NCR's board of directors, but shareholder approval is not necessary, the company said. The stock distribution ratio of Teradata shares to NCR shareholders has not been determined.

Teradata had $1.5 billion in reported 2005 revenue and $309 million in operating income, excluding pension expenses.

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