NCR CEO Forecasts Growth in Self-Service Machines as Customers Cut Costs

NCR Corp., the maker of automated teller machines, had a record 2010 for sales of self-service check-out machines at retailers and expects growth of 10 percent or more this year in that business, Chief Executive Officer Bill Nuti said.

Retailers such as Home Depot Inc. are investing in self- service equipment to trim labor costs and refocus employees on more profitable tasks such as selling more merchandise, Nuti said today in an interview at Bloomberg’s Atlanta bureau.

NCR, which has seen its shares rise 36 percent in the past year, also is increasing market share in the travel sector, where major clients include Hertz Global Holdings Inc. and Delta Air Lines Inc. NCR controls 80 percent of the airport kiosk market in the U.S., Nuti said.

“Now you can get your ticket on the web and check in at a kiosk when you get to the airport and it saves you 20 minutes or an hour that you used to spend waiting,” said Nuti, 47, who became CEO of the Duluth, Georgia-based company in 2005.

About 20 percent of the check-out lanes at grocery and general merchandise retailers are self-serve now, compared to almost none a decade ago, Nuti said. Tesco Plc’s Fresh & Easy grocery stores in the western U.S. are completely self-checkout now, he said.

10% of Revenue

About 10 percent of NCR’s revenue comes from self-service products for retailers, said Gil Luria, an analyst at Wedbush Securities Inc. in Los Angeles, who upgraded the shares to “outperform” from “neutral” on Jan. 4.

NCR is expected to report 2010 revenue of about $4.81 billion, up 4.4 percent from the previous year, according to the average projection of seven analysts surveyed by Bloomberg. Analysts estimate that 2010 net income may double to $238.7 million. The company reports fourth-quarter and full-year results on Feb. 3.

NCR had a “big advantage” in developing self-checkout systems over the past decade because it already had relationships and trust with so many large retailers including Wal-Mart and Home Depot, Luria said.

“These retailers are looking at their capital budgets again and they see self-service as a way to increase efficiency and improve service because they can put more employees on the floor,” Luria said. “Self-checkout tends to be much more software intensive, and that’s where NCR differentiates” from competitors such as International Business Machines Corp. and Fujitsu Ltd., he said.

JPMorgan Deal

Mobile applications are one of the company’s fastest- growing areas, with mobile and software development projected to more than triple to as much as $700 million in the next five years, from $200 million now, Nuti said.

Today NCR announced an agreement with JPMorgan Chase & Co. to replace hundreds of its automatic teller machines with new equipment that can scan cash and checks without an envelope. Chase has 16,000 ATMs in the U.S.

A transaction inside a bank branch costs $4.18, compared with less than 40 cents at an ATM, Nuti said.

NCR was founded in 1884 as the National Cash Register Company, which made the first mechanical cash register.

It later designed the first registers powered by an electric motor, invented liquid crystal display screens, commercialized the first bar code scanners and patented a way to capture signatures electronically.

“One constant throughout our history has been innovation,” Nuti said.

NCR’s competitors include Diebold Inc. and Wincor Nixdorf AG and specialized providers such as Coinstar Inc.’s Redbox DVD rental machines.

NCR rose 1 cent to $16.43 at 4:02 p.m. in New York Stock Exchange composite trading.

To contact the reporter on this story: Mary Jane Credeur in Atlanta at mcredeur@bloomberg.net.

To contact the editor responsible for this story: Anita Sharpe in Atlanta at asharpe6@bloomberg.net.

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