Technology solutions provider NCR Corp. (NCR) recently announced plans to supply its flagship Point-of-Sale (POS) solutions to retailers in Brazil. The idea behind the initiative is to capitalize on the enormous business potential in emerging markets (Brazil, Russia, India and China), which happen to be growing fast these days.
Initially, NCR will offer its RealPOS terminals, software and peripherals to Brazilian retailers. The company also plans to engage channel partners for facilitating sales in the region. NCR has already signed up three channel partners for this purpose.
POS solutions are popular among retailers and restaurant owners. These solutions help users achieve maximum customer interaction, leading to increased productivity. With its POS solutions, NCR seeks to reach super and hypermarket chains, department stores, convenience stores, franchises and the food services market.
NCR’s eagerness to further penetrate fast-growing international markets can be traced back to its significant overseas revenue contribution in the last two fiscal years. During 2009 and 2010, NCR international markets accounted for 65% and 68% of its revenue, respectively.
With its years of experience in serving the retail verticals, we believe NCR Corp. will be able to capitalize on the growth potential in Brazil. According to market research firm Euromonitor International, Brazil secured a second place in retail industry growth in 2010, but may fall one rung below China and India over the next five years, with an average growth rate of roughly 6%.
We are encouraged by the company’s market leadership, successful acquisitions, product introductions and continued customer wins. However, we believe that near-term visibility is limited, as the company faces competition from IBM Corp. (IBM). Moreover, uncertainty in its entertainment business also poses some threat.
Currently, NCR Corp. has a Zacks #3 Rank, which translates into a short-term Hold recommendation.
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