Teradata said it is cutting costs and aiming to sell its marketing software unit as its core data warehousing business slows.
The company reported third quarter earnings and outlined how it is "making transformational changes" that include offering software-only versions of its products and being available on Amazon Web Services in the first quarter. Teradata has typically sold integrated data warehousing systems, but that market has been rattled by the cloud as well as big data.
By selling its marketing applications business, Teradata said it will focus solely on growing its data and analytics unit. Teradata is hoping to save about $120 million in operating income in 2016 excluding one-time costs.
Teradata is currently evaluating how many layoffs its restructuring will include.
The news comes as Teradata is cutting its outlook for the fourth quarter and 2015. Teradata now expects revenue to decline 6 percent to 8 percent in 2015. Non-GAAP earnings will be about $2 a share to $2.20 a share excluding one time charges.
In the third quarter, Teradata reported earnings of $78 million, or 55 cents a share, on revenue of $606 million, down 9 percent from a year ago.
The big issue is that Teradata's primary business is struggling as data warehouses move to the cloud for many enterprises.
Atlantic Equities analyst Josep Bori said Teradata's underlying business is deteriorating faster than the company can launch new product initiatives.
On a conference call with analysts, Teradata CEO Mike Koehler said the company's move to put its software on public and private clouds should expand the market. In addition, Teradata will focus its big data investments.
Our first initiative is to expand our core data warehouse market opportunity where we are positioned as the leaders today, and represents the majority of our revenue. As noted on our last earnings call, we've been reengineering our core Teradata database for more than a year now to make it available as software only for both public and private clouds. This extends the market opportunity significantly for our core data warehouse business.
We will release our initial software-only version for global deployment on Amazon's cloud in the first quarter of 2016. This initial version can scale up to approximately 20 terabytes and do workloads such as departmental analytics, analytics sandboxes, smaller-sized integrated data warehouse, as well as test and development, and disaster recovery.
As a reminder, we plan to have our full-scale public and private cloud software-only versions available in the first quarter of 2017. Or software only offerings will provide customers the flexibility with where and how they deploy Teradata, and how they pay such as through subscription, and the ability to start or expand their existing Teradata environments in smaller increments.
Second, we will continue to rationalize our big data portfolio, focusing investments on solutions that can drive revenue growth and increase our relevance with customers in the dynamic analytic ecosystem -- solutions such as Aster, where we recently announced we are making Aster analytics available on Hadoop in the second quarter of 2016 and will extend our market opportunity significantly. Aster is a market leader for big data analytics and has more than 100 business-ready algorithms and industry applications available, which makes it easier for companies to drive value from big data.