NCR Splits in Two So It Can Deliver Twice The Disappointment

Lots of people have been asking us to write this article but we haven’t had the time to fully invest until recently.

First, some background.

NCR runs three different lines of business, all of them trash.

The first and most dominant is its ATM business. Last year NCR doubled down on its loser ATM business after buying Cardtronics for $2.5B, actively outbidding others to win the deal if you can believe it.

Next is NCR’s digital banking business. Digital banking is an outsourced set of technologies to banks – customers that are shockingly often more incompetent than NCR.

Last is NCR’s software and payments business, comprising POS in several verticals and their JetPay acquisition. The technology in this portfolio is either irrelevant, or it doesn’t even work. That’s not hyperbole.

Honestly, we don’t know which business is worse.

Regardless, NCR hired new management in 2018. Aside from lavishing themselves with inflated salaries and perks (which honestly deserves a shareholder class action), this group of cronies has undone in four short years what took 140 years to build.

Amazing.

After soliciting zero strategic bids in trying to sell the disaster of a business, NCR leadership has been impregnated with the divine wisdom to split the company in two.

Because shit on both shoes is somehow better than a giant turd on one, we guess.

Remember when Amazon split up its company to unlock shareholder value?

Or Google?

Exactly.

NCR is pitching the event as a great way to unlock shareholder value with “two industry-leading companies”, but the best way to create shareholder value would be to find a time machine, turn the dial back four years, and tell Spencer Stuart that hiring Mike Hayford will kill the company.

What are these two “industry-leading companies” that has competitors just absolutely quaking in their boots?

The first is an ATM business.

The second is a digital commerce business, and we can’t even type that without wetting ourselves.

Let’s look at the ATM business.

We wrote about this earlier, but we’ll rehash it again.

ATMs area loser business. Cash is in rapid decline, especially as behaviors changed during the pandemic.

On top of that, bank branches are closing as digital banking swallows commerce.

Need to deposit a check?

Use your phone.

Move money?

Use your phone.

Accordingly McKinsey thinks ATMs will decline at 6% a year through 2025.

There are dozens of article we could point to, like the formal UK parliament report that shows ATMs declining 21% in number from July 2018 to May 2022, but it doesn’t make more than a grade school education to connect the dots here.

In fact, NCR’s spinout ATM business unit is expected to trade for less than NCR paid to acquire Cardtronics.

If that’s not the kind of outcome you can expect for paying a CEO $10M a year then life’s just not worth living.

NCR goes on further to estimate that the ATM business unit will produce 3% returns annually.

Bro.

You been living under a rock?

Here’s a list of Treasury Yields.

Every single one of them pays more than NCR’s proposed ATM business unit yield and, while incompetent, the federal government isn’t “pay-me-$10M-a-year-so-I-can-turn-the-United-States-into-Venezuela-in-four-years” inept.

It takes a really special kind of individual to pull that off.

But maybe when Hayford’s done at NCR he can give lend his experience in the Oval Office so John Q Public can benefit from the full force of his majestic abilities.

Now we’ll talk about the digital commerce business.

This isn’t even a business.

Maybe the digital banking business has some salvage value, but everything else is a literal liability.

Why?

Because you’re going to be tasked with providing support to old, shitty hardware business units that call themselves SaaS, while customers flee for competitors. It’s a festering boil of a business, oozing pus until it drains itself and there’s nothing left.

Self checkout? How about retailers like Lowe’s just building it on their own, or the idea that you’re going to be competing with Amazon?

POS?

Have you heard of this small thing called cloud POS? (NCR has none.)

Payments?

NCR still can’t get JetPay to work the right way.

NCR has bled most of its SMB and mid-market accounts, with the larger merchants just waiting to finish amortizing their POS investments so they can move to another solution.

Sales quotas at NCR must $0 because we haven’t seen NCR win any business in years.

But this whole effort is probably a ruse so Hayford can make $20M a year to ruin two companies, until he can get $40M to ruin four. What a world we live in.