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Teradata and IBM Drag Down IT Consulting Subsector in 2015

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Teradata and IBM Drag Down IT Consulting Subsector in 2015 PART 1 OF 10

Teradata Announces Disappointing 2Q15 Results

IT consulting subsector stocks

In this series, we’ll look at the performance of IT consulting subsector stocks in the First Trust ISE Cloud Computing ETF (SKYY). Since January 2015, SKYY has generated returns of 2.42% to close at $29.18 on Friday, August 28, 2015.

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Subsector performance

In the above graph, you can see that the Technology, Hardware, and Storage subsector generated year-to-date returns of -16.83%. The IT Consulting and Communications Equipment subsector generated returns of -11.92% and -8.30%, respectively.

Subsectors that have outperformed SKYY include Home Entertainment Software, Specialized REITs, and Internet Retail with returns of 19.87%, 18.55%, and 103.97%, respectively.

Netflix (NFLX) has generated year-to-date returns of 141.04%, whereas Amazon has generated returns of 66.91%. In comparison, Teradata (TDC), Rackspace (RAX), and Brightcove (BCOV) generated returns of -32.49%, -33.22, and -31.62%, respectively, since January 2015.

Other companies in IT Consulting that are part of SKYY include International Business Machines (IBM) and Wipro (WIT), which have generated year-to-date returns of -7.77% and 4.51%, respectively.

Teradata declares disappointing 2Q15 results

On August 6, 2015, Teradata declared its 2Q15 results and reported revenues of $623 million. This missed analysts’ estimates of $651 million. Diluted EPS (earnings per share) also fell from $0.72 in 2Q14 to $0.53 in 2Q15. Analysts expected diluted EPS to be $0.56.

Teradata management said 2Q15 revenues were hurt by a slower sales cycle and unexpected delays in closing several large orders. A strong US dollar also contributed to the fall in revenue. Setting aside currency headwinds, revenues would have fallen 2% on a year-over-year basis.

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