NCR Corporation

NCR Corporation is a venerable American technology company that has been a cornerstone of commerce for over a century. Originally the National Cash Register company, it built its legacy on the mechanical cash registers that became ubiquitous in retail stores worldwide. Today, NCR has evolved into a global enterprise providing software, hardware, and services that power transactions across the banking, retail, and hospitality sectors. You've almost certainly used their technology without realizing it, whether withdrawing cash from an ATM, using a self-checkout lane at the grocery store, or seeing a waiter use a tablet-based point-of-sale (POS) system. The company has been undergoing a massive transformation, shifting its focus from selling one-off hardware to a more modern, software-led model built on subscriptions and services. This pivot culminated in late 2023 when NCR split into two independent, publicly traded companies: NCR Voyix (focused on digital commerce) and Atleos (focused on ATMs). This makes understanding NCR a fascinating study in corporate evolution and a “before and after” scenario for investors.

Before its 2023 split, NCR's business was a blend of old and new tech. To understand the two new companies, it's helpful to see what the combined entity did:

• Banking: The powerhouse segment. NCR was a world leader in manufacturing and servicing ATMs. It also provided the crucial software that runs these machines and connects them to banking networks.
• Retail: This involved everything a store needs to handle sales, from POS terminals and barcode scanners to the complex software for inventory management and self-checkout systems.
• Hospitality: Similar to retail, this segment provided technology solutions for restaurants and entertainment venues, including kitchen management systems and guest-facing ordering kiosks.

For a value investor, NCR's story was one of a company wrestling with its legacy. Key themes included:

• Revenue Shift: A deliberate, multi-year effort to increase recurring revenue from software and services, making the business less cyclical than hardware sales.
• Debt: The company carried a significant debt load, partly from acquisitions like Cardtronics, which expanded its ATM network. High debt can be a major red flag, as it magnifies risk and eats into profits through interest payments.
• Profitability: Profitability was often inconsistent, pressured by competition, restructuring costs, and the R&D investment needed to keep up with nimbler tech rivals. Generating consistent free cash flow was a perpetual challenge.

The split in 2023 fundamentally changed the investment case. Instead of one complex company, investors now have two more focused businesses to analyze.

The logic behind the split, a classic special situation play, is that two specialized companies can be more successful than one conglomerate.

• NCR Voyix (The Digital Commerce Play): This company retains the retail, hospitality, and digital banking software businesses. The bull case is that, free from the capital-intensive ATM hardware business, it can operate like a pure-play software-as-a-service (SaaS) company. This could lead to higher growth, better margins, and a higher valuation from the market as its high-quality recurring revenue becomes more visible.
• Atleos (The ATM Powerhouse): This company consolidates the traditional ATM business. The bull case here is that it's a stable, cash-generating machine. While the use of physical cash is declining, the global ATM network remains critical infrastructure. As a focused entity, Atleos can optimize its operations, pay down debt, and potentially return significant capital to shareholders through dividends or buybacks. It's a bet on a business in a slow, managed decline that generates lots of cash along the way.

Splitting a company doesn't magically erase its problems; it just divides them.

• Execution Risk: Corporate splits are notoriously difficult to execute. There can be unforeseen costs, leadership challenges, and disruptions that harm both new entities.
• Competitive Threats: Neither new company operates in a vacuum. NCR Voyix faces fierce competition from modern fintech and software giants. Atleos must contend with the long-term decline of cash usage and the rise of digital payments.
• Legacy Baggage: The significant debt and pension obligations of the old NCR had to be allocated between the two new companies. Investors must scrutinize the balance sheets of both NCR Voyix and Atleos to see how this baggage was distributed and whether it still poses a threat to their financial health. The underlying moat of each business is now under a brighter, more focused spotlight.

Investing in NCR today means choosing between two distinct stories. Do you bet on NCR Voyix as a high-growth digital transformation play, or on Atleos as a high-yield, cash-flow-focused infrastructure play? The 2023 split was an attempt to unlock the value Warren Buffett famously sought when he said he'd rather “own a wonderful company at a fair price than a fair company at a wonderful price.” The key question for a value investor is whether this corporate surgery has created one, or even two, “wonderful” companies from the parts of one that was merely “fair.” A deep dive into the financials and competitive positioning of each new entity is essential before making a decision.