Teradata at Morgan Stanley Technology Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Katy Huberty - Morgan Stanley - Analyst : <_ALACRA_META_ABSTRACT>Good afternoon. I'm Katy Huberty, Morgan Stanley's enterprise, hardware, and PC Systems analyst, and I'm very pleased to have Teradata with us this afternoon. Steve Scheppmann, CFO, Gregg Swearingen, head of IR. And similar to the rest of the formats, we're just going to jump right into Q&A and probably 20 minutes or so from-- for your questions. So, with that, the overarching theme of the conference thus far has been a more benign lookout on IT budgets. So, assuming budgets are flat, probably more likely down in 2009, how could investors

Question: Katy Huberty - Morgan Stanley - Analyst : Okay. So, let's actually break down the business between the 90% that's recurring and then we'll go and talk about what the pipeline looks like and potential for new customers. In the 90% that is recurring, have you seen anything as it relates to customers coming back and trying to renegotiate maintenance or rescope a deal, slow down the deployment of a data warehouse? Have you seen any change in the core customer base in this environment?

Question: Katy Huberty - Morgan Stanley - Analyst : Okay. So, now, if we think about the 10% of the business that is new customers, obviously, a tough environment to get any large multi-million dollar deal through, but can you talk about the opportunity to at least build the pipeline in this environment? And also what that has looked like in past downturns in terms of, do you come out of a downturn with a bigger pipeline and that unleashes in a better environment?

Question: Katy Huberty - Morgan Stanley - Analyst : But, just to be clear, the growth in the pipeline or the funnel is actually oftentimes countercyclical. I mean, you talk about it in financial services, but in retail, there is consolidation happening in the retail sector. Some are going out of business obviously don't need a data warehouse to figure that out, but the survivors are dealing with the need to have their arms around data real-time and, therefore, the arms of those data warehouse slices and therefore your comfort level with the funnel and the pipeline.

Question: Katy Huberty - Morgan Stanley - Analyst : Now, the calendar fourth quarter of '08 was actually quite strong, and I think it surprised a lot of investors. How did you get comfortable that you didn't pull business in from 2009, and what do you think the driver was that actually caused more closing of deals in the fourth quarter?

Question: Katy Huberty - Morgan Stanley - Analyst : Now, last year, you talked about a few different efforts to accelerate growth or open up the market opportunity over time. One was to expand sales territories, the other was to broaden the product line, which you've succeeded in doing, and the product launch was in '08. So, first on the sales territories-- is that still tracking the plan? Have you changed the strategy based on the macroeconomic environment, or is it just full steam ahead and invest for the longer-term growth?

Question: Katy Huberty - Morgan Stanley - Analyst : So, the low-end product family is a weapon in this environment to potentially bring in a customer at a lower cost and then, over time, expand that across businesses that can do a much larger system.

Question: Katy Huberty - Morgan Stanley - Analyst : Got you. And how does the margin compare on a deal with a telco in the 1550 versus the 5550 full enterprise data warehouse.

Question: Katy Huberty - Morgan Stanley - Analyst : Okay. And what is your working assumption as it relates to the time of payback as you add sales territories? Does it take six months, 18 months to ultimately get at quota?

Question: Katy Huberty - Morgan Stanley - Analyst : Okay. I'll ask one more question and then see if the audience has any. There has been a lot of noise on competitions over the last couple of years. Microsoft made a small acquisition, HP has tried to get into the business organically and, more recently, partnered with Oracle on a new appliance solution. What of that noise is real concern for you, versus just noise, and is there any competitor that you're seeing more today versus some months ago?

Question: Katy Huberty - Morgan Stanley - Analyst : Let me open it up and see if there are any questions in the audience. Here? Unidentified Audience Member (inaudible question - microphone inaccessible) and if they do become relevant, how should we think about it impacts your operating model numerically?

Question: Katy Huberty - Morgan Stanley - Analyst : Do you have any customers in the Internet Service Provider space that is looking to take what they've built up internally and provide that externally to clients? So, maybe not fits perfectly into the idea of a cloud, but thinking about expanding your solutions to many, many more users? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. MARCH 03, 2009 / 9:45PM, TDC.N - Teradata at Morgan Stanley Technology Conference

Question: Katy Huberty - Morgan Stanley - Analyst : More questions? Sir? Unidentified Audience Member (inaudible question - microphone inaccessible) product search, but applying it to real life?

Question: Katy Huberty - Morgan Stanley - Analyst : Other questions? In the back? Unidentified Audience Member (inaudible question - microphone inaccessible)

Question: Katy Huberty - Morgan Stanley - Analyst : Is there one last question? Let's wrap it up. Great. Thank you so much for your time.