Good morning ladies and gentlemen and welcome to the Teradata fourth quarter 2009 earnings call. (Operator Instructions) I will now turn the call over to Mr. Gregg Swearingen.

Good morning and thanks for joining us for our 2009 fourth quarter earnings conference call. Michael Koehler, Teradata’s CEO will lead our discussion highlighting Teradata’s fourth quarter and full year results. After Michael’s remarks, Stephen Scheppmann, Teradata’s Chief Financial Officer will provide more details relating to our 2009 financial performance as well as our 2010 guidance. Darrell McDonald, Teradata’s Chief Marketing Officer, who is responsible for strategy and business development is also in the room to answer questions. Our discussion today includes forecasts and other information that are considered forward-looking statements. While these statements reflect our current outlook, they are subject to a number of risk and uncertainties that could cause actual results to vary materially. These risk factors are described in Teradata’s 10-K and other filings with the SEC. On today’s call we will also be discussing certain non-GAAP financial information such free cash flow and revenue comparisons in constant currency. A reconciliation of our non-GAAP results to our reported GAAP results and other information concerning these measures is included in our earnings release and on the investor page of Teradata’s website at www.teradata.com. A replay of this conference call will also be available later today on that website. Teradata assumes no obligation to update or revise the information included in this conference call whether as a result of new information or future results. I will now turn the call over to Michael.

Thanks Gregg, and good morning everyone. Teradata finished the year with a record fourth quarter and 2009 reporting revenues of $496 million, up 1% from a strong fourth quarter in 2008 when revenues grew 9% in constant currency. Revenue for the full year was $1.17 billion, down 3% from 2008 and down 1% in constant currency. The Teradata team had strong execution in 2009 with meaningful gross margin improvements, particularly in our services business and excellent expense management which allowed us to deliver increased operating income and increased earnings per share on lower revenue. More importantly our results for 2009 included investments for our futures. Increased investments in R&D, our partners, and additional sales territories. We extended our technology lead with innovative new releases in our data base software, Purpose-Built platform family, Teradata virtual storage, and in key analytical applications. As a result we have positioned ourselves stronger as we enter 2010. Looking our business from a regional perspective, the Americas region had a strong Q4 generating $300 million of revenue, up 5% from the fourth quarter of 2008 and on top of a prior year Q4 when revenues were up 14% in constant currency. Revenue for the full year was roughly flat with 2008 at $981 million. Overall solid performance for 2009. In Q4 the Americas brought in a number of significant new accounts including Southern Cal Edison, one of the largest utility companies in the US. We are placing additional focus on utility companies as they transform power generation and distribution through the implementation of smart grids and smart metering technology. Navistar, one of the largest wireless companies in Chile, is installing a data warehouse and Teradata relationship manager to consolidate customer information and create personalized offers. United Supermarkets, a regional grocery in Texas, which is leveraging our…

Thanks Michael, and good morning everyone. Teradata delivered another solid performance in the fourth quarter of 2009 highlighted by record setting performances across some of our business categories including total revenue, consulting revenue, Americas revenue, and services gross margin dollars. Revenue of $496 million was up 1% from the strong fourth quarter we reported in 2008, down 3% in constant currency. We grew 9% in constant currency in the fourth quarter of 2008. Product revenue of $239 million was down 4% from the fourth quarter of 2008 as the economy still weighed on IT CapEx spending. In constant currency product revenue was down 7%. Services revenue however of $257 million was up 6% with consulting services being up 4% and maintenance services being up 7%. In constant currency services revenue was up 1%. For the full year total reported revenue was down 3% to $1.71 billion. In constant currency total revenue was only down 1% from 2008. Product revenue for the year of $772 million was down 9% from 2008 and down 7% in constant currency. Services revenue of $937 million was up 3% or up 4% in constant currency. Reported revenue for consulting services was up 2% and maintenance revenue was up 3%. While in constant currency consulting services was up 4% while maintenance services was up 5% for the year. Gross margin in the fourth quarter of 2009 was 56% compared to 54.6% in the fourth quarter of 2008. We had a meaningful increase in our product gross margin while holding our line on services gross margin. Gross margin for the year was 54.9% up one point from 53.9% in 2008. Product gross margin of 67.8% increased 420 basis points from 63.6% in Q4 2008. The increase in product gross margin was primarily driven by improvements in the…

(Operator Instructions) Your first question comes from the line of Wamsi Mohan – BofA Merrill Lynch Wamsi Mohan – BofA Merrill Lynch: Your results in the Americas were very strong, up 21% sequentially you mentioned some increased purchases from large customers like Dell are you seeing signs that customers in the installed base are now coming back to purchase more capacity after a really mediocre first three quarters of 2009, and did you see any specific large deals that drove the strength that might have pulled forward any demand in the fourth quarter.

I would say the fourth quarter behaved somewhat normal so we didn’t see any significant changes in budget flushing or acceleration in the quarter and in fact, we continue to see very good activity in particular in the Americas as we entered into the first quarter of this year. Wamsi Mohan – BofA Merrill Lynch: And if we look at the growth of 7% to 9% for 2010 can you give us some color on expectations by region.

At this juncture it’s a little bit early to comment on the, we do see based on the activity we have visibility to in the first half that we should be at the higher end of the revenue guidance and as we entered into the year the Americas activity was stronger than the international regions. So the visibility that we have for the first half, the Americas from what we can see should be stronger than the, both EMEA and Asia Pacific/Japan. Wamsi Mohan – BofA Merrill Lynch: Can you update us on where you are on your sales territories build out and your expectations for 2010 and what you expect your revenue contribution in 2010 from the sales hires over the past several quarters.

We’re continuing on our build out of the new sales territories. As you are aware we exited 2008 with 40, 2009 we’re exiting the year with slightly greater than 60, and still on target for a minimum of 90 new sales territories at the end of 2010. We did have targets with respect to revenue generated by the new sales territories. We had positive revenue generation in 2009, was it where we would have expected given the economic conditions, no, so below that number, lower, and in 2010 we continue to see expect to have positive contribution from the revenue side incrementally, is it going to be at the levels that we previously discussed, no with the challenges in 2009, with the economic challenges, we expect that to come in slightly below that. But we’re still optimistic on those new territories in 2010.

Generally speaking we’re pretty pleased with the performance of the new territories and the yields that we received in 2009. As Stephen mentioned its slightly below where our expectations were in 2009 and based on what we’re seeing as we sit here today it may be slightly below what we had said on 2010 but its still very early in the year and we’ve been really pleased with the return on the territories.

Your next question comes from the line of Kathryn Huberty – Morgan Stanley Kathryn Huberty – Morgan Stanley: Just back on the strength in the Americas region, do you have a view yet as to whether your market share gains or your wins rates accelerated in the region or is your view that it was really just a broad economic improvement that drove the results.

There really hasn’t been any material change in win rates when we look at 2008 and 2009. We’re just seeing in the user base as well as in new accounts generally a pick up in demand. We’ve had significant if you will delays and deferrals that have been going on since in the 2008 and 2009 and we are seeing an uptick coming from that as upgrades, expansions, continue to materialize, like what we saw in the fourth quarter in the Americas and the type of activity we’re seeing right now as we’ve entered into 2010. Kathryn Huberty – Morgan Stanley: And then just as a follow on to the last question about regional growth in 2010 there are obviously some concerns about a few countries in Europe right now as it relates to how it could influence demand this year and also a weaker euro influencing revenue growth, do you think its fair to say that your assumptions for that region in 2010 are pretty conservative such that if these concerns last for a few quarters that that’s already in your guidance.

I wouldn’t call what we’ve planned for EMEA in 2010 to be conservative or impacted a lot by some of the specific countries you’re alluding to and some of the struggles there. Overall as we stand today we feel pretty good about the business. But the second part of your question as it relates to currency that’s, and the euro, that’s a real variable to the business and our guidance is based on seeing a 1% to 2% type of tailwind from currency and obviously if the thing moves down or moves up by any significant amount that’s a risk. Kathryn Huberty – Morgan Stanley: And then have the new sales territory additions, has there been a skew by geography or has that been pretty well spread across the three different regions.

Its been fairly well spread. Just the sizes of the enterprises here in the Americas and the revenue contribution of the Americas would skew it proportionately. But we’re pretty pleased with the distribution of the revenues we’re receiving from the new territories and as we look at 2010 as well.

Your next question comes from the line of Mark Kelleher – Brigantine Advisors Mark Kelleher – Brigantine Advisors: I wanted to focus on those gross margins, very nice gross margins there, you mentioned that it was a favorable deal mix, could you perhaps describe what’s in a favorable deal.

Yes a favorable deal mix would be really the, if we have a large floor sweep or a tech refresh where we had in Q4 2008, we had some, where you have more hardware versus software. In Q4 2009 we didn’t have those large refreshes or floor sweeps that we had in Q4 2008 and our third party revenue if we had more third party content that would generally drive down the margins. So we had a very good mix by region across the board from a product deal perspective. Those are the really big drivers of that margin. Mark Kelleher – Brigantine Advisors: And could you touch on how your analytics cloud has been doing and how that might effect gross margins if it gets rolling.

Its actually progressing nicely. As you know we introduced it in fourth quarter last year. Its not really contributing any significant revenue today but we have built up an environment at Amazon that’s allowed lots of people to actually start testing Teradata as new prospects and customers so we’ve had quite a bit of interest and some downloads. Both of our Teradata Express addition which is a free download for people to try as well as trials on the Amazon Cloud. Where we’re really seeing more activity around cloud capability is in the private cloud environment with our user base so many of them are starting to experiment with how to build an agile enterprise cloud environment with their current installed base and there we’re starting to see some increased activity but its going well, but not a major contributor from a revenue standpoint at this time.

Your next question comes from the line of f Alex Kurtz – Merriman & Co. Alex Kurtz – Merriman & Co. : So just back on the product margin uptick this quarter, can you just give us some color on the competitive environment and maybe were you able to, was there less competitive pressure in the quarter that also helped the margin.

The competitive pressures and so forth haven’t changed materially at all. So I wouldn’t characterize that as having an impact on the product margin and its basically driven by the types of things that Stephen was discussing earlier. Alex Kurtz – Merriman & Co. : So as we look into 2010 if you think there’s going to be more product refreshes within your installed base should we be more optimistic about being able to sustain a higher product gross margin going forward.

No, I would say its from an overall perspective I mentioned we had that $11 million of software amortization coming through on the product margin. We had a good deal mix in Q4. I would, if you look at our product gross margin over a six-quarter period, that generally gives you a good flavor, again you’ve heard the lumpiness story quarter by quarter. That generally gives you a good flavor and then you can bake in that additional $11 million of software amortization coming through there, should give you a good picture. Alex Kurtz – Merriman & Co. : And I think most companies would not have a lot of visibility into the second half of 2010 at this point, so are you just being conservative with your commentary around 7% to 9% because it would, in your commentary that the first half is going to be better or is there something within your installed base and as you look out at your pipeline it does concern you about the back half.

The second half its strictly due to lack of visibility and we’ve put some conservatism into the second half outlook just based on the visibility, no drivers, nothing at the macro level. Its just we have a pretty good handle on the activity we’re seeing in the first half which we’re very encouraged by and we’ve chosen the model in a more conservative view of the second half with the unknowns that are there.

Your next question comes from the line of Matt Summerville – Keybanc Capital Markets Matt Summerville – Keybanc Capital Markets: A couple of questions relating to some of the things that have already been asked, one of the questions was about budget flush, I actually thought I heard you say that you saw deferrals in a couple of areas specifically with teleco in the Americas and I believe some specific set of customers in APJ, so can you provide a little more color on that.

Just to clarify what we’re saying is I didn’t see any higher degrees of budget flush than we typically see in a quarter in the fourth quarter and some of the delays like with some of the Fortune 500 companies here in the Americas its just more due to timing. Its not due, I wouldn’t call it an economic thing or anything else, I would call it the normal lumpiness that we’ve always seen over the years and the pluses and the minuses we see. You get a fairly significant Fortune 500 type of customer who upgraded, did a major expansion like in 2008 and they don’t do an expansion in 2009. It can have a significant impact on the results for an industry or for a region. So in the Americas we had some pluses in the lumpiness in other industries and what I mentioned was when looking at the com industry results for the year, we had a decline and that was an example of the negatives of lumpiness in 2009. The flipside of it is it becomes an opportunity for us in 2010. In APJ the delays are much smaller dollars but still has a similar kind of impact when you look at the APJ results. So some of those areas I alluded to earlier like delays in teleco in China and Japan and banking in Australia, those become opportunities in 2010. But at the end of the day its just the lumpiness we have in Teradata when you look at large transactions with some large customers and how it impacts results by industry or by region and from year to year. Matt Summerville – Keybanc Capital Markets: How would you describe I guess how the average duration in your sales cycle has trended over say the last 12 to 18 months. Where was the peek if there in fact was one, and have you see that sales cycle start to shorten and then maybe just a follow on to that is maybe you could talk a little bit more about specifically what some of your more meaningful customers are reflecting or saying about their capital budgets for 2010.

As far as sales cycles go there’s really, you really have to look at it a couple of different ways. One of them is new account acquisition and there our average sales cycle is longer. When you run into a rough economic type of environment the sales cycles in new accounts actually are impacted to a lesser degree. The bigger impact in sales cycles occurs in the user base with companies trying to defer spending and large CapEx expenditures and so forth and that elongates the sales cycle in the user base and typically with bigger dollars. If you look at where we’re at today, I would say the sales cycle in the Americas when you look at the user base as was evident in the fourth quarter and the activity we’re seeing now, to a degree has shortened. I wouldn’t call it significant but its shortened so we’re seeing a little bit of an acceleration in upgrades in the user base. Internationally I would say its still running pretty much the same, the sales cycles and the user base as well as new accounts. Matt Summerville – Keybanc Capital Markets: I actually have one more question, there’s been a lot of focus on the expense inflation we’re going to see in 2010, as we think about where you’re at with your current R&D cycle, how should we think about that longer term if you have in 2011 the full run rate benefit from all these sales territories you’ve been adding, if you’re on kind of the downside from an expense standpoint in your R&D cycle shouldn’t we see pretty huge operating leverage once you get beyond 2010 for your business.

No, its really too early to tell and really too early to get into that. We’re continuing one of our strategic initiatives as we continue to invest and grow the research and development as it relates to our products. And this is one of the things of coming out of the spin with [NCR] that we’re very committed to do and you see that commitment growing in 2010 slightly greater than 10% over the 2009 levels. And we’re still committed to that so, but on the flipside we continue to look at making sure we’re getting the efficiencies and driving the returns out of those investments so that’s why I’m saying its too early to tell. If we’re getting those returns and its reflecting through product revenue and gross margin improvement we’ll continue to make that investment. So at this point in time I guess the tagline is to say is its really too early to discuss it in 2011 and the leverage that we would get.

Your next question comes from the line of Nabil Elsheshai – Pacific Crest Securities Nabil Elsheshai – Pacific Crest Securities: If I could follow up on the telecom in particular there’s been some reports including I think at one of your bigger customers about them over investing in network and I’m wondering if that is having an impact on what you’re seeing and maybe some of the reasons for the delay in some of the deals on the IT side and if so, it would seem like that would be more of a several quarter type of impact instead of something that would reverse in one quarter, is that incorrect.

Good point, in China we saw an increased focus and expenditures in network infrastructure and 3G that got prioritized and that did contribute to some of the teleco expansions for Teradata not occurring and being delayed in 2009. We don’t see it a long-term delay. Our activity there is picking up and it won’t be a long delay. It did impact us though in 2009 to your point. Nabil Elsheshai – Pacific Crest Securities: And is that the same in the Americas as well, obviously AT&T made a lot of noise on their earnings call about investing in the wireless network.

The Americas, no. Nabil Elsheshai – Pacific Crest Securities: Could I get an update on SAP, is the integration on track for I believe release this quarter and then how is the sales and rollout going. Have you worked out all the go to market details.

Yes we have worked out all the go to market details. I would say the partnership is progressing well. We’ve had activity that’s continuing around the business intelligence and analytics work that we’re doing in both SAP and Teradata accounts, so that’s still on a good track and we’re seeing positive activities. We’ve also had some joint solutions that we released in the fourth quarter that we shared with our partners around their new SAP business object explore, Teradata is going to certify that, have a platform that supports that. We think its going to be a nice solution for leveraging the enterprise data warehouse in both Teradata and SAP accounts. On the port front we are continuing the port activities. We were originally planning on having it ported in the first half, unfortunately due to some issues that we both have come across its going to be pushed out to the second half of 2010. So we’re still making progress, we’re still having good success in the market but we are going to have a slight delay in the port and it will move to completing in the second half of 2010. Nabil Elsheshai – Pacific Crest Securities: I was wondering if I could maybe get some commentary on free cash flow and if you could provide any color on both capitalized software expense and CapEx in 2010.

Total I would say still in that range of 80 to 90 total PP&E and capitalized software, pretty consistent with the prior years, maybe up $5 million or so on that. With respect to free cash flow, we had very good performance again this year on our receivables performance, down to 83 days DSO from 93 days. So my proxy, my benchmark has always been net income plus or minus $25 million. In the last two years because of the management of the working capital we’ve been greater than that, $367, $369 million in the last two years, so I would expect us to be more down to kind of my benchmark of net income plus or minus $25 million with capitalized software and PP&E in that $80 to $90 million range. Nabil Elsheshai – Pacific Crest Securities: And then just so I’m clear, you had mentioned R&D is going to grow a little faster than revenue what about cash spend on R&D if you can account for capitalized expenditures, is that a similar growth rate.

Yes that will increase, as I mentioned we went from $52 million in 2008 to $59 million in 2009, that will continue to increase in line with that percentage expense increase probably. Nabil Elsheshai – Pacific Crest Securities: And then I missed it what was the percent of revenue from retail and from manufacturing.

In 2009 retail was 17% and manufacturing was 10%. Nabil Elsheshai – Pacific Crest Securities: And then I think you have made a little bit of an effort on new customer acquisition and maybe some [inaudible] markets is there an update there and what kind of traction are you seeing.

We don’t disclose the number of new account wins. I will say the number of new account wins was very good, very strong, in the fourth quarter, second half of the year. And a lot of new account wins with the appliances across the board in the US as well as a lot new account wins in international. And overall we’re on a pretty good rhythm on new accounts. The funnel is up and the activity is up.

Your next question comes from the line of Derrick Wood – Wedbush Securities Derrick Wood – Wedbush Securities: Just a question on the balance sheet so deferred revenue usually see some sequential growth in Q4 if you look at it historically, looks like it was actually down quarter over quarter this quarter, could you give us some color as to what the reason was for this.

Behind the deferred revenue number on the balance sheet there’s really three components, there’s our deferrals for maintenance, our deferrals for subscriptions, and our deferrals for what I call product deferrals under GAAP from a revenue, software revenue recognition rules. Our maintenance and subs behind that number grew as you would expect 2009 over 2008. Where we showed the decline was very specific product or transactions that are basically unique to the deal and where under GAAP I would have to defer revenue based on the structure of the transaction. Those transactions vary quarter by quarter and year over year. And typically sometimes you get at the end of the year some structures that when you review them and go through them, require deferral of product or revenue and those vary again year by year. That’s where the difference resulted, nothing unusual in the maintenance and the subscriptions that gets capitalized on the balance sheet as of quarter end or year-end. So nothing unusual behind it other than the one-time transactional items. Derrick Wood – Wedbush Securities: So extrapolating that would you say that the deferred license revenue component dropped quarter over quarter from Q3 to Q4.

That would be one of the, that would be the driver, the unique transactional product revenue that was deferred.

Your final question comes from the line of Greg Halter – Great Lakes Review Greg Halter – Great Lakes Review: Just a couple of quick ones for you relative to the cash on the balance sheet, obviously you had a very good position here, wondered if you could discuss your capital structure thoughts of corporate repurchase versus any possible M&A type activities.

In 2009 we’re about one half of our free cash flow 2008, one half of our free cash flow we continue to be very aggressive and opportunistic in the market with respect to our stock. We’ll continue to do such. We always look at M&A activities or opportunities particularly from a technology perspective and also from a top line revenue perspective. So there’s been no changes in our assessing our capital structure with respect to taking advantage of those opportunities in 2009 and as I look forward in 2010. So its pretty consistent and again the emphasis on the technology and emphasis on the top line revenue growth. Greg Halter – Great Lakes Review: And one last one, do you have the number of employees as of the end of the year.

It was 6,600 I believe. Okay, I’d like to thank everyone for joining the call. We’re looking forward to 2010 and we look forward to talking to you all again next quarter. Thank you.