Technology and solutions provider for the retail and financial services industries, NCR Corporation (NCR), recently entered into a strategic alliance with Scopus Tecnologia for manufacturing and developing ATMs in Brazil. According to the deal, Scopus will acquire a 49.0% equity stake in NCR Manaus, NCR’s Brazilian manufacturing and engineering operations.
Concurrently, Banco Bradesco (BBD) signed an agreement with NCR in order to roll out 30,000 ATMs over the next five years. NCR is currently the preferred ATM provider with an initial order for more than 6,000 ATMs from NCR Manaus. The agreement is subject to regulatory approval. Moreover, the terms of the deal were not disclosed.
We believe this strategic alliance will add value to the company’s existing business and will strengthen its presence in Brazil. As per a recent study published by Retail Banking Research, the ATM market in Brazil is expected to increase by 27.0% through 2015.
The agreements will enable NCR to leverage Scopus’ in-depth technology knowledge and geographical presence, improve manufacturing productivity and deliver innovative products rapidly to financial institutions across Brazil, which is the world’s fourth largest ATM market. The agreement with Banco Bradesco will accelerate NCR’s growth in Brazil and enhance the company’s position in the market.
The company is consistently growing through strategic alliances and acquisitions. The recent acquisition of Netkey added considerable value to the company.
This acquisition provided NCR with a good digital signage application platform, which is built on the same platform as Netkey’s kiosk applications, thereby helping the deployment of NCR’s solutions. Moreover, NCR Corporation (NCR) recently agreed to acquire Radiant Systems Inc., a provider of hardware and software systems for the restaurant and hotel industry, for $1.2 billion in cash.
Post acquisition, the company plans to combine its portfolio of automated checkout products with Radiant’s systems portfolio, which caters to the fast-food and table-service restaurants, specialty and convenience retailers and entertainment venues.
NCR intends to expand into areas similar to its main product line, like ATM machines and self-check-in airport kiosks. NCR expects to fund the acquisition with a new debt of approximately $1.1 billion, which is expected to close by Sept. 30.
Moreover, the company is also expanding its orderbook through several deal wins. The company will provide its SelfServ Automated Teller Machines (ATM) to Texas-based Broadway Bank. Financial details of the deal were not disclosed.
As per the terms of the deal, NCR will provide the Bank with SelfServ ATMs along with its Solidcore Suite for APTRA. NCR will also support hardware and software maintenance. The bank seeks to replace its old ATMs with the new ones to provide best-in-class retail services.
NCR reported decent second quarter results, with revenues improving across all regions, especially in BICMEA (Brazil, India, China, Middle East and Africa), where sales were driven by higher customer wins across all sectors. However, overall sales improved due to a recovery in macroeconomic conditions, particularly in the retail, financial services and hospitality industries.
We are encouraged by the company’s fiscal year guidance and believe that it is well positioned to deliver solid momentum across all its businesses. We are positive about the company’s market leadership, successful acquisitions, product introductions and continued customer wins. However, the restructuring initiatives have begun impacting the results. Moreover, uncertainty in its entertainment business also poses some risk.
Currently, NCR Corp. has a Zacks #2 Rank, which translates into a short-term Buy rating.
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