Teradata Plays It Smart

You've got a lot of data that won't fit easily into a database. Teradata (NYSE: TDC  ) wants to help you manage it all, and it'll pay hundreds of millions for the privilege.

Yesterday, the company announced plans to acquire the 89% of Aster Data Systems it didn't already own for $263 million net of debt and other costs. The deal values Aster, whose algorithmic technology helps customers to cost effectively process massive amounts of unstructured data, at $295 million.

Management said in a press release that it expects the merger to close in the second quarter. Financing wasn't disclosed, but with $883 million in cash on Teradata's balance sheet, I suspect a cash deal is in order.

Either way, Teradata is picking up a key asset in Aster. The company's nCluster technology borrows from the open-source MapReduce clustering process that helped birth Google (Nasdaq: GOOG  ) and combines it with algorithms for processing structured (i.e., numbers) and unstructured (i.e., web logs, sensor data, etc.) information in a traditional database management system.

For an analytics provider, this is a powerful approach. Clients get a system for digging into untold terabytes of data that would otherwise remain unprocessed but that could contain value. For example, comparing website access logs with purchasing data might reveal weaknesses in a product catalog.

Without MapReduce, accomplishing this task would be incredibly expensive. With it, the process becomes economical. Big processing jobs get broken into small chunks over a cluster of low-cost servers. The open-source Hadoop project and adherents such as privately held Cloudera have combined MapReduce with a flexible file system for storing and processing massive amounts of data.

Aster's contribution is to combine a massively parallel column-and-row database with analytics applications so that processing occurs where the data lives. Tough questions get answered fast and economically.

Whether the deal will help Teradata disrupt key data warehousing competitors IBM (NYSE: IBM  ) , Oracle (Nasdaq: ORCL  ) , and Microsoft (Nasdaq: MSFT  ) isn't known at this point, but with Teradata reporting accelerating revenue growth it's clear that demand for its analytics technology is on the rise. Adding Aster Data is a timely nod to this enthusiasm and should keep growth chugging along for a while.

Do you agree? Disagree? Let us know what you think about analytics, Aster Data's technology, and Teradata's competitive positioning using the comments box below. You can also rate Teradata in Motley Fool CAPS.

Interested in more info on the stocks mentioned in this story? Add Google, IBM, Microsoft, Oracle or Teradata to your watchlist.

Google and Microsoft are Motley Fool Inside Value picks. Google is a Motley Fool Rule Breakers recommendation. Teradata is a Motley Fool Stock Advisor selection. Motley Fool Options has recommended members purchase a diagonal call position in Microsoft. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers is a member of the Rule Breakers stock-picking team. He owned shares of Google, IBM, and Oracle at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. You can also get his insights delivered directly to your RSS reader. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool owns shares of Google, IBM, Microsoft, and Oracle and is also on Twitter as @TheMotleyFool. Its disclosure policy would gladly pay you Tuesday for a hamburger today.


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