Due to the spin-off of the Teradata data warehousing business to shareholders at the end of the third quarter of 2007, NCR's results from continuing operations for all periods exclude the results of Teradata, which is presented as discontinued operations.
NCR fourth-quarter income fell to $86 million, or $0.47 per diluted share, compared to $95 million, or $0.52 per diluted share, in the fourth quarter of 2006. Earnings from continuing operations for the fourth quarter of 2007 included $9 million, or $0.05 per diluted share, of costs from items related to NCR's manufacturing realignment, the Fox River environmental matter and a realignment in Japan. Excluding these items, non-GAAP earnings from continuing operations were $0.52 per diluted share, which compares to $0.52 per diluted share in the prior-year period.
"NCR delivered a strong performance in its first quarter following the Teradata spin off," said Bill Nuti, chairman and chief executive officer of NCR. "More balanced execution in the quarter helped us maintain progress in each of our strategic focus areas: driving profitable revenue growth, increasing our productivity and using our strong balance sheet for the benefit of long-term shareholder return. Looking ahead, NCR enjoys an outstanding opportunity to claim leadership in an expanding addressable market for self-service solutions. To that end, we expect our product development investments in 2007 will make 2008 the biggest new product launch year since the company's spin off from AT&T."
NCR's financial self-service segment generated fourth-quarter revenue of $537 million, an increase of 14 percent from the fourth quarter of 2006, driven by strong growth in the Europe, Middle East and Africa region as well as in the Americas. The fourth-quarter year-over-year revenue comparison included 5 percentage points of benefit from currency translation.
Operating income of $79 million was impacted by an adverse geographic and deal mix of revenue in the quarter and compared to $84 million in the fourth quarter of 2006. Expenses increased from the previous year due to higher revenues, foreign currency impact, and an increase in investment in research and development and sales in targeted high-growth areas.
The retail segment reported revenue of $331 million, up 28 percent from the fourth quarter of 2006. The year-over-year revenue comparison included four percentage points of benefit from currency translation. Revenue growth was driven by traditional point-of-sale rollouts in the quarter with continued momentum in self-service solutions.
Operating income of $22 million was flat when compared with the prior-year period. The operating income increase relating to higher revenues was offset by $5 million for the write off of radio frequency identification assets in the quarter. The higher percentage of assisted point-of-sale business in the quarter impacted the profit margin; and expenses increased due to higher revenue, foreign currency impact, and increased investment in sales and research and development related to our self-service initiatives.
