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Tickers in this Article: NCR, DBD
NCR Corporation (NCR) recently announced the acquisition of retail software and services company Retalix Ltd. for $30.00 per share in cash, totaling approximately $650 million. NCR is treading the acquisition route for growth and the recent acquisition is consistent with this strategy. Through this acquisition, NCR seeks to migrate to a hardware-enabled, software-driven business model, thereby delivering solutions that would improve business operations, resulting in enhanced customer satisfaction. NCR primarily intends to shift its business mix in the higher-margin software and services. Moreover, the company wants to provide better value added services to its customers.

NCR will also deploy Retalix's software to strengthen and enhance its enterprise software platform, thereby creating a new software base to be used across the retail industry, and ultimately influencing NCR's financial, travel and hospitality industries all over the world.

The company is also focusing on its core ATM business, which is seeing an improvement in business volume, as regional banks are upgrading their ATMs. Moreover, the recently acquired Radiant System is also making a meaningful contribution in this particular segment. This apart, the company is also tightening its grip on the ATM and Point-of-Sale (POS) markets in Europe, particularly in Germany.

Although the company continues to witness a turnaround story in Europe, the situation looks particularly bleak in Western Europe.

The company is constantly evolving its business strategy to increase profitability. Moreover, given the integration of Radiant System and favorable position in Germany, the company's revenue is expected to increase going forward. Although the restructuring initiatives have begun impacting results and demand is picking up, we believe that it will take some more time to have a meaningful impact on results.

Moreover, high interest outflow of the company may have a negative impact on the profitability of the company and needs special attention. Moreover, the company is coming up with new strategies to compete against  Diebold Inc. (DBD).

The company has a Zacks #3 Rank, implying a short-term Hold rating. The long-term recommendation remains Neutral.

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