NCR Corp.'s acquisition and pension costs contributed to a decrease in third-quarter profits. But the chief executive of the ATM and kiosk maker expects two recent purchases, combined with continued demand worldwide, to generate strong long-term growth.
"Our third quarter featured strong execution and performance in addition to two strategic transactions that will help shape NCR's future," Bill Nuti, chairman and CEO of NCR, told analysts during a conference call Oct. 27.
In August, NCR completed its acquisition of software vendor Radiant Systems Inc. NCR said at the time it expects the purchase to cut administrative and personnel costs and spur growth in international markets.
"This new vertical market offers significant revenue opportunities for NCR, from both a customer and geographic standpoint. And, most importantly, the businesses, technologies and market approach accelerate our drive to a more software-enabled business model in the years ahead," Nuti told analysts.
NCR also recently announced an alliance with Scopus Tecnologica, a subsidiary of the Brazilian financial group Banco Bradesco S.A. The partnership, which comes with an ATM supply agreement with Banco, expands NCR's presence in the growing Brazilian market, Nuti said.
NCR will supply Banco with some 30,000 ATMs in the next five years, he said.
The company's financial services segment, which includes ATMs, generated third-quarter revenue of $770 million, up 18% from $655 million. NCR did not detail its revenue by region.
As a company, NCR's third-quarter net income decreased 82%, to $15 million from $85 million a year earlier. Revenue for the quarter ended Sept. 30 was up 17%, to $1.4 billion from $1.2 billion.
"Demand trends in financial services continue to demonstrate strength across all of our global regions," Nuti told analysts.
NCR is seeing more orders from midsize and regional financial institutions, which are committing more capital to improving their ATM fleets with the latest technology, he added.
Nuti highlighted an agreement with Redwood Credit Union in California that calls for NCR to replace some 29 machines with ones that include technology to enable consumers to deposit cash and checks at the same time through a single slot.
NCR also is replacing machines at BMO Harris Bank N.A. with the same technology.
The company's retail solutions segment, which includes point-of-sale products for merchants and restaurants, reported revenue of $461 million, up 7% from $430 million during the same period last year.
Revenue from the entertainment segment, which includes Blockbuster LLC DVD kiosks, was up 45%, to $42 million from $29 million.
Blockbuster competitor Redbox Automated Retail LLC recently attributed its 20-cent price increase on DVD rentals to the new debit card fees that went into affect Oct. 1. NCR did not say whether the fees would affect Blockbuster kiosk management.
