Monday October 25, 4:08 pm Eastern Time
Company Press Release
SOURCE: NCR Corporation
NCR Focuses Business Solutions Structure To Deliver Greater Growth and Profitability Company plans $200-250 million charge offset by one-time gain, expects approximately $75 million annual savings; $250M added to share repurchase program
DAYTON, Ohio, Oct. 25 /PRNewswire/ -- NCR Corporation announced today that it is accelerating its transformation from a computer hardware and product company, to a technology solutions and services provider by focusing the company on three customer-centered, growth oriented business solutions offerings, facilitating the elimination of losses from commodity hardware, and intensifying emphasis on data warehousing.
''We will increase the focus on solutions that offer tremendous growth opportunities across many industries and in all geographies, and that capitalize on our strengths,'' said Lars Nyberg, chairman and CEO of NCR.
Overall, the changes will lead to an alignment around three key solutions, the elimination of approximately 1,500 positions, and an enhanced leverage of the investment in the data warehousing offering. The three key solutions portfolios include Data Warehousing, Financial Self Service (ATM) and Retail Store Automation.
The costs associated with these changes will require a restructuring charge in the range of $200-$250 million, which will be recorded in the fourth quarter of 1999 and will be offset by a non-recurring tax reserve gain. These costs, incurred primarily to restructure the commodity hardware-based Channel Delivery Solutions business, include employee separation, facility consolidation, satisfaction of customer obligations, and write down of goodwill and assets. NCR expects to realize annual savings of approximately $75 million as a result of these initiatives, beginning in 2000.
''Our already improved operating income, in 1999, would be better by at least another $100 million had it not been for the under-performance of the Financial Group, both in data warehousing for banking, where our execution has been weak, and in Channel Delivery Solutions, where we have incurred significant losses. On the other hand, our ATM business, has continued to pull further ahead of the competition, along with an even stronger showing by Retail Store Automation. With today's announcement, we are decisively addressing the issues, and giving our businesses a razor-like focus to expand in their respective markets,'' said Nyberg.
Solution Alignment
''The alignment of the company's business to serve customer needs in three key solution portfolios -- Financial Self Service (ATM), Retail Store Automation, and Data Warehousing, all supported by a powerful global customer services and support business -- is a natural evolution of our strategy to become a leading solutions provider,'' said Nyberg.
NCR has stated that its business strategy goal is straightforward -- to be one of the top three global competitors in each key solution. ''In very competitive businesses like Financial Self Service and Retail Store Automation, we hold enviable market positions that continue to get stronger. In the emerging data warehousing market, we must capitalize on the growth opportunity. The collective changes will allow us to bring more value to our customers, faster, even as we address a larger market opportunity,'' Nyberg stated.
NCR is the global leader in the Financial Self Service (ATM) business, and holds the number two position in Retail Store Automation. These solutions will benefit from the alignment, with continued focus on new products and services that will strengthen leadership and increase operating income going forward. In data warehousing, a more fragmented market, NCR has achieved tremendous success in a number of industries including retail, telecommunications and airlines, built on the foundation of the powerful Teradata technology.
E-commerce Needs Data Warehousing
Data warehousing provides an outstanding opportunity for revenue and earnings growth. This is particularly true in electronic business, where data warehousing is the technology that companies need to add intelligence to the Web. With the explosive growth of the Web, companies are collecting more information about their customers and suppliers than ever before. In this environment, information is becoming the currency of commerce. The real value -- and the real challenge -- is in the use of that information. And the real competitive advantage for our customers will be in harnessing the value of all those clicks to create and sustain relationships. NCR's Teradata technology is ideally suited to this environment, where the ability to handle massive amounts of data, extreme processing requirements and complex queries is critical.
With today's announcement, Data Warehousing Solutions will benefit from the initiative combining all data warehousing efforts under one organization, led by Mark Hurd. ''We bring to our customers, the best technology, industry knowledge, immeasurably more experience, unmatched references, and the strongest pre and post-sales service capabilities. Combining all these elements into one organization lets us address the entire market in the most synergistic manner,'' Hurd said. The new organization will be named Teradata Solutions Group.
Armed with leading technology, NCR will concentrate on increasing its marketing efforts and on adding needed skilled resources -- internally or via small acquisitions -- to seize the growing market opportunity, to maintain Teradata's technical leadership and to broaden application offerings. In addition, NCR plans to significantly expand its trategic partnerships, such as the recently announced agreement with MicroStrategy Incorporated.
Restructuring Charge
The organization announcement also addresses the losses from offerings based on commodity hardware, particularly Channel Delivery Solutions, which sells local solutions hardware and services in the banking business in many different areas of the world. After restructuring these offerings, NCR's three key solutions portfolios with customer services will represent about 95% of the revenue base (excluding Systemedia).
To cover the costs associated with employee separation, facility consolidation, satisfying customer obligations, and goodwill reduction, on October 21, 1999, NCR's Board of Directors approved a restructuring charge to be taken in the fourth quarter of 1999 ranging between $200 to $250 million. As a result, NCR anticipates annual savings of approximately $75 million beginning in 2000. These savings have been factored into NCR's previously stated objectives for earnings growth. More importantly, NCR puts an end to the drag on top line growth, giving the company the ability to grow at a higher rate with improved profitability. The company expects to offset the restructuring charge with a non-recurring tax reserve gain.
Share Repurchase
On October 21, 1999, at a regularly scheduled board meeting, NCR's Board of Directors authorized a stock repurchase program of $250 million. This buyback is in addition to the buyback approved in April of this year, of which $74 million remains outstanding.
The $250 million of stock will be repurchased on an on-going basis. Continuous stock repurchases may be made from time to time in the open market or through privately negotiated transactions at management's discretion. Repurchased shares will be added to NCR's authorized, but unissued shares.
''NCR's asset valuation is too compelling to ignore this opportunity to reduce our outstanding stock,'' said NCR Senior Vice President and Chief Financial Officer, David Bearman. ''NCR is now generating significant operating cash flow, and our investment strategy allows us to allocate a considerable portion of the cash generated towards buying back NCR stock, while still being in a solid position to fund future growth,'' he added.
NCR will hold a conference call on October 26, 1999, to further discuss the business strategy. The broadcast can be accessed by calling 402-220-5185 and is available beginning at 12:00 noon (EDT), on the 26th and continuing until 5:00 P.M. (EDT) on October 29, 1999.
About NCR
NCR Corporation (NYSE: NCR - news) is in the business of transforming transactions into relationships. NCR is a recognized world leader in data warehousing solutions, ATMs, point-of-sale systems, high performance scanners, and support services. NCR's business solutions are built on the foundation of the company's long-established industry knowledge and consulting expertise, value-adding software, global customer support services, a complete line of consumable and media products, and world-leading hardware technology. More information about NCR and its products may be found on the World Wide Web at
www.ncr.com . |
