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Cloudera still in the red, warns Hortonworks integration might fail

Written by Mon 1 Apr 2019

Cloud data management company has revealed all to investors in its latest annual report, providing a candid assessment of the difficulties involved in integrating it and Hortonworks’ platforms

Cloudera has accumulated a deficit of $1.1 billion, posted a six-figure net loss for the third year running, and warned losses will keep on piling up “for the foreseeable future.” 2018’s headwind follows $369.7 million and $158.4 million losses in 2018 and 2017, respectively.

The 10-K report filed with the US Securities and Exchange Commission is an extensive document detailing all the risks that might trip up Cloudera’s business plans, operations results and cash-flows.

For Cloudera the losses don’t reflect its core value proposition, just the substantial investment it has made to scale, commercialise and develop the platform via proprietary software components and open source contribution, and the costs associated with its Hortonworks merger.

In the report, Cloudera cites the substantial transaction costs of the merger and warns integration with the trunked-up data management platform will lead to further costs and operating expenses down the road.

It also appears that Cloudera underestimated the difficulty of integrating with Hortonworks, admitting that as part of its “significant future expenditures” it will embark on “other merger integration investments, such as ongoing engagement of integration consultants.”

“The integration of our and Hortonworks’ platforms, each of which has operated independently prior to and may continue to operate independently for some time after the closing of the merger, presents significant challenges,” the report reads.

“We may not be successful at integrating the independent platforms or realizing the anticipated synergies and other expected benefits of the merger.”

Cloudera points to the difficulty of cross-selling to each of the two companies’ customer bases and the “uncertainty” felt by its employees, customers and suppliers, which it says may lead to poor morale and the loss of key employees.

The two former Hadoop rivals completed their merger in January. Hortonworks is not flourishing financially either, recording a net loss of $204.5 million in 2017.

Written by Mon 1 Apr 2019

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cloudera hortonworks M&A
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