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Why Teradata Corporation Fell 11.5% in June

By Anders Bylund - Jul 12, 2016 at 4:33PM

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What: Shares of data storage expert Teradata (TDC 2.73%) fell 11.5% in June 2016, according to data from S&P Global Market Intelligence. Share prices took a haymaker from the Brexit vote, and the damage was deepened the next day as an analyst pointed out that (AMZN 3.66%) is stealing customers in one of Teradata's core markets.

So what: Plenty of stocks plunged on the outcome of the Brexit vote, but Teradata suffered more than most. The U.K. has been a solid growth market for Teradata's data and analytics products in recent quarters, so the prospect of slower orders from that hamstrung economy can be scary to Teradata investors.

Then, analyst firm CLSA posted a report, explaining that a low-cost bulk storage product known as Amazon Redshift is growing much faster than its traditional rivals. The data warehousing package more than tripled its revenue in 2015 while Teradata and other traditional providers posted shrinking sales.

That one-two punch lowered Teradata shares more than 14% in just two days.

Now what: This was one more painful slide in a long series, stretching back to highs of more than $80 per share in 2012. Share prices have fallen more than 66% from those lofty heights.

Amazon is not the only next-generation data storage option coming around the bend. Teradata is facing down a terrifying array of fresh-faced competitors, some of whom come with overall business pedigrees more impressive than Teradata's own.

Trailing sales have declined by 20% over the last three years, and free cash flows decreased 14%. Teradata is running under new leadership, and new CEO Victor Lund hopes to have a concrete turnaround plan to present alongside the second-quarter report in early August.

Stay tuned.

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