We downgrade our recommendation on NCR to Underperform as the
company lowered the fiscal 2014 revenue guidance anticipating lower
revenue growth across its business segments, especially Retail
segment. Also, the company reported year-over-year decline in
third-quarter earnings. Continued investments in business to
provide new and differentiated products could also impact margins
in the near term, coupled with softness in the ATM business in
mature markets and a high debt burden, remain the concerns going
forward. However, continuous product launches, growing popularity
of its self-service offerings and synergies from acquisitions are
the catalysts. NCR's deal wins across its business segments also
prove beneficial for the company's top line.
Founded in 1884 and headquartered at Duluth, GA, NCR Corporation
(NCR) and its subsidiaries provide technological solutions (both
products and services) to help organizations connect, interact and
transact with customers and solidify customer relationships. NCR
serves customers in financial services, retail, hospitality,
travel, and telecommunications and technology industries.
NCR's product offerings include automated teller machines
(ATMs), self-service kiosks and point of sale (POS) devices, as
well as software applications that help in interaction and business
transaction through computers or mobile devices. NCR's products are
complemented by a portfolio of services.
NCR has four reportable operating segments: Financial Services,
Retail Solutions, Hospitality (formerly known as Hospitality and
Specialty Retail) and Emerging Industries, which includes Travel
& Gaming, Healthcare, and Telecom & Technology lines of
business. NCR sold its Entertainment business to Redbox Automated
The broad range of products includes ATMs, cash dispensers and
software solutions (like APTRA self-service ATM software
application suite, cash management and video banking software),
which are particularly useful to financial institutions and
Products targeted especially at the retail and hospitality
industries include POS terminals, self-check-in/out systems,
self-service kiosks, bar-code scanners, software and services.
Self-service kiosks for travel and gaming industries are also
included in this portfolio.
The company also develops, produces and markets printer
consumables, including paper rolls for receipts in ATMs and POS
solutions, inkjet and laser printer supplies, thermal transfer and
ink ribbons, labels, laser documents and business forms, as well as
photo and presentation papers and thermal paper. These products
serve the retail, transportation, financial services and
NCR also provides a broad range of services to support/maintain
its product offerings. Its services include Predictive Services
(which is a managed services offering designed to predict and
address information technology issues before they happen), Software
as a Service (SaaS) (which is a hosted service) and online, mobile
and transactional services and applications such as bill pay and
NCR derives the majority of its revenues from the United States,
followed by Europe and AMEA (Asia, Middle East and Africa).
The company competes with players across all geographies. In the
financial services industry, the company competes with Diebold,
Inc. and Wincor Nixdorf GmbH & Co. (Wincor), among others. In
the retail and hospitality industries, the company faces
competition from IBM Corp. (IBM), Wincor, Fujitsu, Hewlett-Packard
Company, Dell Inc., Honeywell and Datalogic, among others.
Competition in the travel industry comes from IBM, SITA and IER. In
the gaming industry, NCR's key competitors are IBM, Wincor and
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