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January 28
NCR Corp. said investments in improving its technology are helping it recover from the downturn by sparking more demand from retail banks.
Last year, the Duluth, Ga., ATM and kiosk maker announced an intelligent deposit module that allows users to deposit cash and checks, in bulk, via a single slot. Before this module, envelope-free deposits required two slots — one for cash, and another for checks. NCR said it hopes that as bigger banks upgrade to the single-slot feature, smaller banks will feel compelled to play catch-up.
Still, that doesn't mean NCR is riding high. William Nuti, the company's chairman and chief executive, said "it took tremendous resolve" to just come this far.
"Managing through this past fiscal year just completed was certainly challenging," Nuti said on a conference call with analysts Thursday. "We had to remain focused on our short- and long-term goals" while "disruptions of historic proportions" stifled NCR.
Analysts said it ceded business to Wincor Nixdorf AG in 2009. The Paderborn, Germany, ATM maker received big orders from JPMorgan Chase & Co., which has about 16,000 automated teller machines in the U.S., and Wells Fargo & Co., NCR said.
It is gaining that market share back with its scalable deposit module technology — JPMorgan Chase said it plans on placing hundreds of machines equipped with the module in branches nationwide. In October, Wells said it planned on rolling out about 200 of the mixed-media modules across Colorado.
This month, NCR said it has sold 125,000 SelfServ intelligent deposit ATMs since their introduction in 2008.
In the last three months of 2010, NCR said it swung to a profit of $38 million from a loss of $57 million a year earlier.
Revenue was up 5%, to $1.4 billion.
"I think they turned a corner," said Gil B. Luria, a Wedbush Morgan analyst. "They are more profitable than everybody thought."
Still, pension liabilities continued to plague NCR. It said its international and executive pension plan was underfunded by $997 million at the end of 2010. NCR said it plans to contribute $125 million to its pension plans this year.
As for financial services, the business is still NCR's largest, executives said, though its self-serve DVD entertainment kiosks are its biggest prospect for future growth.
At the end of last year, NCR had about 8,000 DVD kiosks across the country.
Luria said he had doubts about NCR's prospects in the entertainment market.
"NCR is a very good ATM company," he said. "They know nothing about being an entertainment retailer, and they are learning that the hard way by setting expectations and not living up to them."
Nuti said entertainment as well as airline check-in kiosks, are precisely what will drive NCR in coming years.
"We are not out of the woods, yet," he said. "But [we] certainly expect [2011] will be a better year for NCR."
