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Continued Weakness Pushes NCR To A New Strategy

Since its creation of the first mechanical typewriter in 1884, NCR has been a standard part of the American retail experience. That experience has grown to include POS devices and the product the firm is most known for – ATMs.

But as of late the firm is looking at new strategic options as its falling stock price and increasingly dissatisfied shareholders have pushed it toward considering alternatives like the spinoff or sale of assets or a return of cash to investors through a dividend or share buyback. A full sale of the company is also on the table, people familiar with the matter told The Wall Street Journal, but some of the people cautioned that is a less-likely outcome.

NCR is based in Duluth, Georgia, and has a value of around $5 billion.

Lately the company has faced softening demand from retailers who are leaning increasingly away from traditional POS systems. The firm reported weak earnings in October and lowered its financial guidance; it also added the founder of Marcato Capital Management (a shareholder) to its board. JANA Partners LLC is also a recent investor drawn in by the stock’s apparent underperformance, as they revealed a 7 percent passive stake in the firm earlier this year.

In the last year, NCR stock has fallen 11 percent and is trading below where it was 10 years ago. The firm, in the recent past, has sought to diversify away from its traditional product line – something Marcato has said explicitly they would like to see more of though M&A activity.

If a sale does manage to go through, it might feasibly end up as the largest leveraged buyout of 2015.

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