NCR Corporation (NCR), a leading technology and solutions provider for the retail and financial services industry, is currently trying to expand in the cloud computing market.
The company recently launched its new NCR Hosting Services, which enables cloud providers’ to gain access to NCR’s IT infrastructure and service support in a highly flexible and cost-effective way. The new services are targeted at telecom carriers, original equipment manufacturers (OEMs) and system integrators throughout the U.S.
The new technology designed by the company offers plenty of options to end customers. They can either opt for a facility-plus-assets service solution, or lease rack space for their own equipment in NCR’s high-security, temperature-controlled facility in Beltsville, MD. Hosting services can be rapidly provided with minimal service provider management effort as demand for cloud-based computing services grows.
Technology research firm Gartner believes that the cloud computing market could be worth almost $150.0 billion globally by 2014. Moreover, the cloud-based services, which encompass Software as a Service (SaaS) to Infrastructure as a Service (IaaS) on a pay-as-you-go basis, are likely to become a key element in many corporate IT strategies over the next several years.
So NCR has entered the cloud computing business at the opportune moment with a compelling business model, which has the potential to fetch rich dividends for the company.
Over the years, NCR has gained significant traction in the execution of its self- service strategy, expanding into new markets such as entertainment. A recent study by Banking Research (RBR) suggests that NCR has been the #1 supplier worldwide of multi-vendor ATM middleware and applications for 23 consecutive years.
The report also states that more financial institutions in North America rely on NCR's software suite compared to the next three providers taken together.
This apart, the ATM and retail POS upgrade cycles are clearly moving along nicely, as the company reported year-over-year growth in financial services and retail/hospitality segment revenue and there is a fair chance that the backlog/order growth will further be realized in terms of revenues in the second quarter and accelerate through 2H11.
Moreover, the entertainment segment is also growing and offers good opportunity and the company will likely seize this opportunity.
NCR reported decent first quarter results, with revenues improving across all regions, especially in BICMEA (Brazil, India, China, Middle East and Africa). The upside in revenues was attributable to higher customer wins across all sectors. However, overall sales improved due to a recovery in macroeconomic conditions particularly in retail, financial services and hospitality industries.
We are encouraged by NCR’s second quarter guidance, and believe that the company is well positioned to deliver solid momentum across all its businesses. We appreciate the company’s market leadership, successful acquisitions, product introductions and continued customer wins.
However, we are a bit concerned about its Japan business, which has been hit by the recent natural calamity. Moreover, the restructuring initiatives have begun impacting results.
Currently, NCR Corp. has a Zacks #2 Rank, which translates into a short-term Buy rating.
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