Article

NCR reports strong fourth-quarter financials

Revenues increase 12 percent in the Americas, which includes the United States

February 3, 2011

NCR Corp. yesterday posted better-than-expected fourth quarter financials due to a strong increase in revenues from two of its three reporting regions.

The Duluth, Ga.-based ATM manufacturer recorded a net income of $39 million for the three months ended Dec. 31, 2010. This compares with a net loss of $56 million for the same three months in 2009.

NCR, the world's largest ATM manufacturer based on annual shipments, recorded revenues of $1.406 billion in the 2010's fourth quarter, up 4.5 percent compared with $1.345 billion in 2009's fourth quarter.

The company reported $609 million in revenues from the Americas, an increase of 12 percent compared with $544 million in revenues for the same three months in 2009. The Americas includes the United States, the Caribbean and Latin America.

NCR officials attributed the increase to higher product sales to customers in the financial services, retail and hospitality industries. Revenues in the Americas also were positively impacted by 1 percent due to foreign currency translations.

In Europe Middle East Africa (EMEA), NCR recorded fourth-quarter revenues of $501 million, up 2.4 percent compared with revenues of $489 million for the same three months in 2009. NCR reported higher product sales to customers in the financial services, retail and hospitality industries, but foreign currency translation negatively affected EMEA revenues by 5 percent.

In Asia-Pacific/Japan, the news was not as good. NCR reported revenues of $296 million, down 5.1 percent compared with $312 million in the same three months in 2009. The region reported lower product sales to the financial services, retail and hospitality industries across the region. Revenue in Asia-Pacific/Japan, however, was positively affected by 5 percent due to foreign currency translation.

"NCR had a good close to 2010 and as a result is better positioned to improve revenue growth and non-pension operating income expansion in 2011," NCR officials said in a statement. "Order growth in Q4 was strong, our backlog has improved and we continue to execute well on sustainable productivity improvements thanks to the efforts of our continuous improvement teams around the company." Orders were up 13 percent in the fourth quarter of 2010 compared with same three-month period in 2009.

Gil Luria, senior vice president of Equity Research and Financial Technology at Wedbush Securities in Los Angeles, said NCR has "turned the corner" with a strong guidance. The company's 2011 year-over-year guidance is for 5 percent to 7 percent revenue growth. Income from operations is expected to range from $160 million to $180 million, an increase of 62 percent to 82 percent.

"We believe NCR remains poised to exceed expectations as core ATM and retail businesses return to growth in 2011, drawing more focus as stabilizing pension obligations and a less dilutive DVD business become less of a distraction," Luria wrote in his analyst's report.  NCR's fourth-quarter revenue exceeded his estimate of $1.389 billion and the analysts' consensus estimates of $1.391 billion.

NCR reported 2010 fourth-quarter income from operations of $52 million, which included $52 million of pension expense and an $8 million litigation charge. In 2009's fourth quarter, the manufacturer reported $39 million of income from operations, which included $41 million of pension expense, a $22 million charge for impairment of assets related to an equity investment and $6 million of incremental costs related to the company's headquarters relocation.

In the financial business, NCR announced that it will install ATMs at hundreds of JPMorgan Chase & Co.'s locations in 2011. The deployment will include ATMs equipped with its Scalable Deposit Module, enabling cardholders to deposit checks and cash simultaneously into a single slot. Rival Wincor Nixdorf AG, which is based in Paderborn, Germany, offers a similar ATM, but it is not a mixed media machine. Cardholders must deposit cash followed checks or vice versa.

NCR also noted that it has extended its market leadership in China. The company sold nearly 6,000 NCR SelfServ ATMs to China's five-largest commercial banks; the company said it also making inroads with China's small and mid-size banks. China is predicted to become the world's largest ATM market by 2015.