Enterprise data warehousing company Teradata Corp agreed to buy privately held Aprimo for $525 million to expand into cloud software services, as it gears to meet challenges from larger rivals IBM and Oracle.

Indianapolis-based Aprimo provides software to its enterprise customers, who use it to analyze data to map out their marketing and advertising efforts.

Cloud computing -- a technology that allows users to access data, software and services over the Internet and corporate networks -- is being touted as the next big trend in the technology sector.

Companies like Teradata, Oracle, EMC Corp and IBM are shifting their focus from increasingly commoditized hardware to higher-margin software and services, particularly analytics, which help clients analyze market data to plot trends or prevent fraud.

Teradata's peers -- Netezza Inc and 3PAR -- have been snapped up in recent months by IBM and HP respectively.

The Aprimo deal follows IBM's $480 million purchase of marketing software firm Unica Corp, Aprimo's rival, in October.

BRANCHING OUT

The Aprimo buy appears to be uncharacteristic of Teradata, Susquehanna Financial analyst Derrick Wood said.

This acquisition puts Teradata more into application space instead of just a database provider, Wood said.

As competition in Teradata's core market intensifies, it is looking toward related markets to branch out and diversify its total revenue, Wedbush Securities' Michael Nemeroff said.

Some analysts see the deal as Teradata's response to some of its bigger rivals making inroads into its core markets, specifically IBM and Oracle.

Aprimo is expected to post sales of about $80 million in 2010 and grow revenue in the high-teens longer term, Teradata said on a conference call with analysts.

Aprimo, which counts Merrill Lynch and Warner Bros among its customers, had $68 million in revenue in 2009, according to its website.

The deal, expected to close in the first quarter of 2011, includes the assumption of $25 million in Aprimo's cash and is expected to add slightly to its adjusted earnings in the first year after closing.

Teradata shares, which have gained about 61 percent since touching a year low in February, were down 3 percent at $41.80 in morning trade on the New York Stock Exchange.

(Reporting by Himank Sharma and Saqib Iqbal Ahmed; Editing by Gopakumar Warrier)

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