Teradata Corp. (TDC) recently announced that it has completed the acquisition of Munich-based eCircle for an undisclosed sum. Based on its cloud-based marketing tool, eCircle delivers digital messages to prospective customers via email, social channels and websites. Teradata intends to integrate eCircle within its Aprimo unit. Acquired in 2010, Aprimo is a leading provider of integrated marketing management services. Although eCircle will continue to maintain its business operations to offer extensive support to its existing 1000 customers, the acquisition is expected to expand Aprimo's geographical presence and services footprint.
Aprimo's software-as-a-service (SaaS) offerings integrate marketing data that help businesses to target right customers with the right offers. On the other hand, eCircle supports e-mail and social-media based marketing efforts. When combined, the solution will expand Teradata's reach into different online channels where the company lacked a presence.
Teradata hopes to integrate its flagship data warehousing solutions and Aster Data big data analytics along with the offerings of Aprimo and eCircle going forward. Aster Data analyses both unstructured and multi-structured data types typically found in e-mail, Web and social media marketing campaigns.
This platform-wise integration is expected to benefit customers, as they will not only be able to deliver marketing messages to customers but will also be able to monitor social channels for customer sentiment and collect the related data for further analyses, thereby smoothing out the decision-making process going forward.
According to Forrester, more than 45.0% of big data implementations are in the marketing department. Moreover, the social media, email and mobile marketing market is expected to grow from $6.0 billion to $16 billion by 2016. We believe that the acquisition fills up an important gap within Terdata's marketing portfolio, which will help it to tap this significant growth opportunity going forward.
Moreover, the acquisition will help Teradata to compete against larger rivals such as IBM Corp. (IBM) and Oracle Corp. (ORCL) in cloud-based offerings over the long term.
We believe that Teradata will continue to benefit from its international expansion, improved traction from sales force expansion, new products and alliances, market share gains and a growing database analytics market. However, increased investment in sales, higher R&D expenses and an increase in the number of competing products in the market are resulting in continued pricing pressure that will likely limit margin expansion going forward.
We maintain our Neutral recommendation over the long term (6-12 months). Currently, Teradata has a Zacks #2 Rank, which implies a Buy rating in the short term.
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