NCR's Q1 goes the way of the Hurd
Gone but not forgotten
NCR presented a familiar story in its first quarter of 2005 by showing a modest revenue gain and a much more dramatic rise in income. Such a quarterly formula was common during former CEO Mark Hurd's tenure. NCR's first quarter, ended 31 March, was the last to fall under Hurd's charge with him now at HP.
NCR reported revenue of $1.34bn, which was a 4 per cent year-over-year rise with no adjustments and just a 2 per cent rise in constant currency. The mediocre revenue growth was offset by a surge in income, as NCR reported a $35m gain for the period. In the same quarter last year, NCR posted a $5m loss.
Numerous reports have celebrated Hurd as an efficiency expert responsible for a dramatic turnaround at NCR - a leading factor behind HP's hiring of the executive at the end of March.
But some sources familiar with Hurd's rule at NCR have criticized his approach and results. They say he simply cut jobs, reduced key services and outsourced a lot of work at the expense of product quality, internal morale and customer support. Many see Hurd's moves as short-term fixes to long-term problems.
Hurd ran NCR for all of 2004 and showed very similar results to those posted in the first quarter of this year. In 2004, NCR's revenue grew only 3 per cent in constant currency - not the type of growth typically associated with a highly sought after CEO.
There, however, were plenty of bright spots in NCR's first quarter.
The well-respected Teradata data warehousing unit brought in $350m - a 14 per cent year-over-year rise or 11 per cent in constant currency. NCR's ATM business posted $272m in revenue - up 8 per cent year-over-year or 5 percent in constant currency.
Revenue from the Retail Store Automation unit showed revenue of $175m - a rise of 6 per cent or 4 per cent in constant currency. NCR's Customer Services business posted revenue of $436m - down 2 per cent or down 4 per cent in constant currency.
NCR is still conducting policies similar to those in place under Hurd.
"As part of the company's continued efforts to improve profitability in Customer Services, NCR has offered an early retirement program to qualified Customer Service engineers in the United States," the company said. "Depending on the level of participation in this program, the company anticipates up to a $22 million one-time, non-cash increase in pension expense in the second quarter of 2005."
NCR expects earnings to rise between 3 per cent and 4 per cent during the second quarter. ®