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NCR Corp. (NCR - Analyst Report) posted fourth-quarter 2012 earnings per share (EPS) of 72 cents, which surpassed the Zacks Consensus Estimate of 69 cents.

Revenue

NCR reported revenues of $1.64 billion in the fourth quarter, up 2.6% from $1.60 billion in the year-ago quarter. Total revenue was positively impacted by the solid year-over-year increase in Hospitality segment, supported by marginal increases in Retail Solutions and Financial Services segments. This was partially offset by double-digit decline in Emerging Industries segment.

Financial services reported revenues of $912.0 million, up 0.4% from $908.0 million in the year-ago quarter. In Financial Services, the company is continuously gaining market share on a national level, and the growth of this segment is fueled to a considerable extent by some previous acquisitions.

Retail solutions revenue was up 2.0% year over year to $490.0 million in the quarter. The company witnessed a good quarter in retail, with growth in both orders and backlog.

The Hospitality segment’s revenue increased a robust 42.9% from the year-ago quarter to $150.0 million in the reported quarter. All the segments such as Hardware, Software and SaaS experienced growth.

The Emerging Industries segment reported revenues of $90.0 million, down 16.0% year over year. The decline in revenues was driven primarily by a decrease in revenues in the Americas and Europe theaters.

Operating Results

Gross margin in the quarter was 20.2% versus 24.0% in the year-ago quarter. The year-over-year downside in gross margin was fueled by higher product and services cost.

NCR reported a net loss of $22.0 million or 14 cents per common share in the reported quarter, compared with $12.0 million or 37 cents per diluted share in the year-ago quarter. Excluding special items like impairment, pension expense, acquisition related transaction cost, amortization and legal settlement charges; non-GAAP income from continuing operations was 72 cents per share compared with 66 cents per share in the prior-year quarter.

Balance Sheet & Cash Flow

Net cash provided by operating activities was $100.0 million during the fourth quarter of 2012, down from net cash generation of $274.0 million in the year-ago period. Cash from operating activities was negatively impacted by additional pension contributions.

NCR ended the quarter with $1.07 billion in cash and cash equivalents versus $581.0 million as of Sep 30, 2012.

Guidance

NCR expects its full-year 2013 revenue to increase in the range of 9.0% to 11.0%. Income from operations is expected in the range of $548.0 to $563.0 million. GAAP EPS is expected in the range of $2.06 to $2.16, while non-GAAP EPS is expected in the range of $2.65 to $2.75.

Recommendation

NCR reported modest fourth-quarter results, with revenues improving across most of its business segments, and EPS surpassing the Zacks Consensus Estimate. Higher volumes helped the company, while higher costs led to lower gross margin.

The company provided a decent fiscal 2013 guidance and believes that it is well positioned to generate good business volume in fiscal 2013. The company faces strong competition from Diebold (DBD - Snapshot Report).

Currently, NCR Corp. has a Zacks Rank #3 (Hold). Investors can also consider other technology stocks such as Symantec Corp. (SYMC - Analyst Report), which carries a Zacks Rank #1 (Strong Buy), and CA Inc. (CA - Analyst Report), which has a Zacks rank#2 (Buy rating).

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