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Why Teradata Shares Tanked

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Teradata (NYSE: TDC  ) plummeted 17% this morning after the data management specialist lowered its outlook for 2013.

So what: The stock has pulled back significantly in recent months on concerns over slowing growth, and today's downbeat guidance -- prompted by disappointing third-quarter demand -- only reinforces that worry. In fact, Teradata said third-quarter revenue from the Asia, Pacific, and Japan markets dropped 21%, while it fell 19% in the Middle East and Africa segment, suggesting that gorilla rivals like Oracle continue to pressure its market share position overseas.

Now what: Management now sees 2013 adjusted earnings per share of $2.70-$2.80 on flat revenue of $2.67 billion, well below its prior view of $3.05-$3.20 and 6% revenue growth. "Although we were disappointed with our preliminary results for the third quarter of 2013, we were pleased with our performance in Europe and in the U.S., which are our two largest markets," CEO Mike Koehler reassured investors. "We remain confident in our competitive position in all the markets we serve over the long term." More important, with the stock hitting a new 52-week low today and trading at a forward P/E of 13, Mr. Market's near-term concerns might provide a cheap opportunity to bet on that bullishness. 

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Read/Post Comments (3) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 15, 2013, at 1:38 PM, Rowants wrote:

    I keep expecting the advice I pay for, but keep receiving goobly gook followed by an ad for yet another MF service.

  • Report this Comment On October 15, 2013, at 3:02 PM, Fabin81 wrote:

    That being said, I just bough a Jan 2015 call on teradata for more than 50% discount cause of the drop. Yeah baby!

  • Report this Comment On October 16, 2013, at 10:00 AM, TheRealRacc wrote:

    This is a free article. You didn't pay this for.

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9/30/2016 4:03 PM
TDC $31.00 Up +0.89 +2.96%
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