Upcoming Spin-Off: NCR & Teradata

By Douglas A. McIntyre Published Jan 8, 9:46AM EST

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NCR Corp (NCR-NYSE) has made a somewhat surprising move this morning, and its shares are up 4% in applause of the deal. NCR hired J.P.Morgan to separate into two independent publicly traded companies through the spin-off of the company’s Teradata Data Warehousing business, via a 100% tax-free spin-off to NCR shareholders. This is roughly one-third of the company, so it far from a minimal spin-off of a company that they are just going to jettison to get it off the books.

Teradata had revenues of $1.5 billion and operating income (excluding pension expense) of $309 million in 2005 and is one of the leaders in the enterprise data warehousing market. Teradata enables organizations to gain a single, integrated enterprise view of their business.

NCR will be the same company sans-Teradata: automated teller machines (ATMs), retail self-checkout systems, automated bill payment systems, self-check-in/out kiosks, point-of-sale technologies and customer-support services. Combined, these businesses had revenues of $4.5 billion in 2005.

Bill Nuti, president & CEO of NCR, said, "This separation is a logical strategic step for NCR. We believe it will benefit our customers, business partners, employees and shareholders. 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. Each new entity should be able to more effectively pursue their specific growth and research and development agendas, while designing employee incentive plans that are more directly aligned with their own performance and growth objectives. In addition, NCR investors should benefit from increased transparency and clarity, which will allow them to more appropriately value the merits, performance and future prospects of both companies."

Bill Nuti will serve as president and CEO of NCR, and Mike Koehler, currently senior vice president of the Teradata Division, will serve as president and CEO of Teradata. Additional information on management and Board composition will be communicated in the future. This spin-off is subject to certain conditions, including final approval by NCR’s Board of Directors, receipt of a ruling from the Internal Revenue Service with respect to the spin off, the absence of any material changes or developments and the filing and effectiveness of registration statements with the Securities and Exchange Commission. Approval by NCR shareholders is NOT required and the spin-off ratio will be set at a future date within the six to nine months before it becomes effective.

Jon C. Ogg
January 8, 2007

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.