NCR reports weak 4Q, predicts tough 2003

DAYTON, Ohio -- NCR Corp. (NYSE:NCR - News) reported net income of $57 million, or 57 cents a share, for 2002's fourth quarter, a 20 percent drop compared to $71 million, or 72 cents a share, in 2001's fourth quarter.

Revenue slipped 1.2 percent to $1.58 billion from $1.6 billion.

As reported earlier, the latest quarter included $29 million in real-estate consolidation, restructuring and asset-impairment charges and a tax benefit of $20 million. Excluding them, NCR said it would have earned $66 million, compared with year-earlier earnings excluding items of $88 million.

When NCR released its third-quarter results in October, it forecasted fourth-quarter earnings of 70 cents to 80 cents a share on revenue flat to off  5 percent from a year earlier. But the company warned last week that because of the charges, it was expecting net income of about 50 cents a share.

NCR also said on Jan. 23 its previously disclosed pension-related charge was $841 million on a pretax basis. The company had estimated the charge, which didn't affect any of its results, at about $850 million.

Looking ahead, the company is estimating flat first-quarter and full-year revenue for 2003. Year-earlier figures were $1.25 billion for the quarter and $5.92 billion for the year.

NCR predicted a first-quarter loss of 45 cents to 50 cents a share, compared with year-earlier earnings of four cents a share. NCR said in last week's warning it expected a "challenging" first quarter "due to seasonal patterns and continued adverse market conditions."

NCR is projecting 2003 earnings of 45 cents to 50 cents.

For all of 2002, NCR had a net loss of $220 million, or $2.21 a share, compared with net income of $217 million, or $2.18 a share, in 2001. Revenue fell 5.6 percent to $5.59 billion from $5.92 billion.

Excluding a $348 million charge from adopting new goodwill-accounting rules, NCR said 2002 earnings would have been $128 million, versus year-earlier earnings excluding items of $208 million.

In a statement, Chairman and Chief Executive Lars Nyberg said, "2002 was a difficult year on many fronts. Hardest hit were NCR's retail-store automation and customer-services business segments."

NCR's Financial Self Service segment, which includes ATMs and APTRA software, reported revenue of $346 million in the fourth quarter, up 1 percent from 2001's fourth quarter. The company attributed the increase to growth in the Americas and Asia-Pacific regions, offsetting economic weakness and competitive pressures in the European marketplace.

NCR expects flat revenues in Financial Self Service for 2003, as softness in the European market is expected to continue. However, NCR expects revenues for Financial Self Service to rise 5 percent to 10 percent in the first quarter of 2003.

NCR's Retail Store Automation business, which provides store-automation technologies such as point-of-sale terminals, bar-code scanners and software, self-checkout systems and electronic shelf labels, recorded revenue of $233 million in 2002's fourth quarter, up 3 percent from the fourth quarter of 2001. Retail Store Automation saw an operating loss of $1 million, down from operating income of $11 million in 2001's fourth quarter.

According to NCR, operating margin declined largely due to competitive pressures and increased costs associated with its supply chain. NCR believes 2003 revenue is will rise 10 percent to 15 percent from 2002, driven by 2002 order activity that will offset continued weakness in the retail marketplace. In the first quarter of 2003, Retail Store Automation revenue is expected to be up 20 percent to 25 percent versus 2002's first quarter due to a strong order backlog.

Data Warehousing was again the top performer for NCR, with 2002 fourth-quarter revenues of $341 million, up $24 million or 8 percent from 2001's fourth quarter. Operating income for the quarter increased more than 160 percent from the fourth quarter of 2001 to $34 million. However, NCR expects growth of 0 to 5 percent in 2003, due to a constrained information technology capital-spending environment. In the first quarter of 2003, revenue for Teradata data warehousing is expected to be down 10 percent, versus a strong first quarter of 2002.

In September, Co-President Mark Hurd was promoted to NCR's chief operating officer and fellow Co-President Howard Lance left the company. In November, NCR said it would cut 1,500 jobs -- or 5 percent of its work force -- to streamline operations.