STRATEGIC PARTNERS
January 14, 2001
DAYTON, Ohio -- A soft retail sales environment inNCR Corporation'sretail-related businesses has led to revenue and earnings figures below previous fourth quarter estimates, the company announced. NCR's fourth quarter ended Dec. 31, 2000.
NCR had expected fourth quarter revenue to increase approximately 5 percent over the 1999 comparable period. Revenue from the company's key business solutions increased 10 percent over the fourth quarter of 1999 and was up 16 percent on a local currency basis. NCR expects reported revenue for the fourth quarter of 2000 to be $1.79 billion, an increase of 2 percent over the company's 1999 fourth quarter revenue. Revenue was up 7 percent on a local currency basis.
The revised estimates are due to lower than anticipated revenues in the company's Retail Store Automation business and related services and supply businesses as the retail industry suddenly felt the effects of the slowing U.S. economy. Despite the economic conditions, revenue growth in the quarter for the Retail Store Automation business is still expected to yield a 14 percent increase over the prior-year period.
NCR's Data Warehousing business generated record levels in orders and revenue, the company reports, with revenue growth of 19 percent over the prior-year period. However, the product mix -- primarily related to storage components -- impacted earnings for the business. This was an unusual situation and is not expected to occur in future quarters.
NCR's Financial Self Service business had what the company described as a very solid quarter, increasing revenue 5 percent. On a local currency basis, the business grew 13 percent in the quarter.
Overall, NCR expects operating earnings, before special items, for the quarter and year to be approximately $130 million and $270 million respectively, increases of 33 percent over both prior-year periods. The company has improved its effective tax rate to about 33 percent for the year. As a result, NCR expects earnings per share, before special items, in the fourth quarter of approximately $1 to $1.05, on a fully diluted basis. As reported by First Call, the current analysts' consensus earnings estimate is $1.14 per share for the fourth quarter of 2000.
"We had a strong fourth quarter in Financial Self Service and we continued to aggressively grow our Data Warehousing business," said Lars Nyberg, NCR chairman and CEO. "But despite 14 percent revenue growth in the quarter for Retail Store Automation, this was below the levels we expected based on a strong backlog and customers' keen interest in our new retail products."
Nyberg added that NCR anticipates "continued slowness in the retail area during the first half of 2001. Cost reduction measures initiated during the fourth quarter, along with further actions, will help offset this situation," he said.
Revenue growth targets for 2001 for NCR's major businesses remain unchanged, except for Retail Store Automation. The revenue growth target for this business will be modest, but the cost structure will be reduced further to enhance profit potential. NCR has not changed its previous guidance for 2001 earnings growth and continues to expect operating income, before special items, of $380-$385 million and earnings per share of $2.80-$2.90.
