Not Expecting Uptick in Tech Spending in 2009 - NCR

Jun.12.09 | About: NCR Corporation (NCR)

Retailers aren’t likely to resume spending on their IT infrastructure again until at least 2010, according to NCR (NYSE:NCR) Chairman and CEO William Nuti.

In an interview Friday afternoon with Tech Trader Daily, Nuti said that demand for the company’s point-of-sale retail terminals remains “slow around the world.” He says the sector will want to see signs of a pick-up in consumer discretionary spending in the upcoming back-to-school and holiday shopping seasons before showing a renewed willingness to invest. One key, he says, could be the direction of fuel price, which as Nuti notes has a strong correlation with consumer discretionary spending. (Higher gasoline prices are not good for retailers, he means. And what is bad for retailers is not so good for NCR.)

Nuti notes that few retail chains are expanding store counts, and some continue to retrench. The NCR chief doubts the company will see any pick-up in demand from the sector until new store growth turns positive. Nuti thinks 2010 will almost certainly be a better year for the retail sector than 2009, but he concedes that for some retailers it could take longer to resume expansion. And while Nuti thinks next year will bring a modest improvement in comp store sales, he’s not ready to say that will translate into higher demand for NCR’s wares.

Demand is a little better in the company’s ATM business, where he says large banks are racing to deploy “intelligent deposit” technology, which allows consumers to do things like deposit checks without an envelope, and get a receipt with check images. Nuti says mid-sized banks have been slower to adopt the technology, but that they are going to have to do so to fend off competition from larger rivals. Demand remains slow in Western Europe, he says, particularly in countries like the U.K. where consolidation has been a factor. Nuti reports that conditions are better in Eastern Europe, but again notes that mid-sized banks have been slower to move to new technology. China, he says, has been a stand-out, with year-over-year growth in ATM deployment. In India, he says, conditions are “just beginning to pick up a bit.”

For NCR, the big news is the company’s recent decision to move its headquarters from Dayton, Ohio to Duluth, Georgia. The company is creating more than 2,000 jobs in its new home state, including 1,200 administrative and office jobs in Duluth (a suburb north of Atlanta) and another facility in Peachtree City, south of the city. NCR will create more than 850 new jobs in Columbus, in the western part of the state, where it plans to take over an old Panasonic facility and convert it to a factory for building ATM machines. The Columbus jobs are new positions, created as a result of a decision to take U.S. manufacturing of ATMs in house - NCR has been outsourcing manufacturing here to Flextronics (NASDAQ:FLEX).

Nuti says it chose to move to Georgia for a variety of reason: it already had more employees in the state than it had back home in Ohio, for starters. The state gave NCR some generous tax incentives which Ohio didn’t match. Clearly, the region needs the work: Nuti notes that a recent web posting for 21 managerial slots was met with more than 2,000 resumes in two days.