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NCR to Acquire Transoft International

by Zacks Equity Research

September 11, 2012 | Comments : 0 Recommended this article: (0)

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NCR Corporation (NCR - Analyst Report) has chosen the inorganic route for growth and recently announced the acquisition of Transoft International, Inc. The latter is a cash cost optimization software company for financial institutions and retailers.

Post-acquisition, NCR has plans to integrate Transoft’s software and SaaS-based product suite into its Financial Services unit. The employees of Transoft will also be taken into NCR.

The company did not disclose the financial details of the deal. We believe that this acquisition is a well-thought strategy, as it can help the company to strengthen its existing cash management offering.

Transoft has the expertise to manage cash for thousands of ATMs across the globe. The cash optimization software uses complex statistical analysis tools, which ultimately helps financial houses to optimize the cash requirement of the company. NCR believes that cash management is a $1 billion market taking into consideration the integrated technology hardware, software and service solutions.

As cash management incurs around 30.0% of the ATM expenses, so proper cash management results in huge savings for banks and financial institutions. The company has identified this opportunity and is trying to plug the gap with innovative solutions and technical collaborations.

While the company is exploring new areas of growth, we remain highly positive about NCR’s broad-based exposure in the ATM space. According to a study published by Retail Banking Research, NCR has been the world's largest supplier of multi-vendor ATM middleware and applications for 25 consecutive years.

We believe that NCR’s commitment to protect the integrity of the ATM channel and offering more benefits at a lower cost has been inspiring banks and a host of other financial institutions to choose its services.

However, NCR will continue to face stiff competition from Diebold Inc. (DBD - Snapshot Report) and Wincor Nixdorf in the ATM market.

Currently, NCR Corp. has a Zacks #3 Rank, which translates into a short-term Hold rating.

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