Fool Sells NCR
February 24, 1997

Description: Accepting NCR's buy-back offer
Phone for buy-back plan: 1-800-NCR-2303
NCR HQ: 1700 S. Patterson BLVD.
Dayton, OH 45479
Closing price, 2/24/97: $36 1/8

Trade: SELL 8 shares commission-free to NCR's buy-back offer


Hey, We Never Even Bought This Stock!

If you search for the Fool's buy report on NCR CORP (NYSE: NCR), you won't find it, because the Fool didn't purchase this stock. NCR was spun-off from AT&T (NYSE: T) on January 2, 1997. The Fool was given 0.0625 shares of NCR for each share of AT&T owned; owning 130 shares of Ma Bell, a big eight shares of NCR was delivered to our account on the first trading day of 1997. Each NCR share arrived to us at an average cost-basis of $33 5/8.

Due to these circumstances, the Fool's selling of NCR in no way represents an opinion on the company or the stock. Why, then, are we selling? Simple: NCR has offered to buy-back ten shares or less from each individual shareholder for a one-time fee of $10. Thus, we need not pay any brokerage commissions for this sale, only the $10 buy-back fee.

If from the AT&T spin-off you were granted 10 or fewer shares of NCR and you wish to sell them back to the company, this offer is good only until Friday, February 28, 1997. Simply call your broker for details and then to complete the transaction. Do not sell your shares electronically. You need to speak with your broker and tell him or her you're interested in selling your NCR shares (any amount less than 10) through the NCR buy-back offer.

The Fool is selling now to avoid the commissions we would incur in August upon selling the stock at the time of our annual Foolish Four, Dow Dividend switch. (Regarding any stocks "given" to us through spin-offs from the Foolish Four companies, it is the Fool's policy to sell the shares prior to -- if possible without commissions -- or at the same time as our annual August Fool Four switch. So, yes, our other AT&T spin-off, LUCENT TECHNOLOGIES (NYSE: LU) will be sold in early August). If you have questions about this, please e-mail MF BudFox.


In this type of situation, we don't need to give further details, but we're caring Fools...

NCR was bought by AT&T in 1991 and lost big money (around $4 billion) up to 1996. The company finally turned a profit again in the most recent quarter, after being freed from AT&T's shackles.

NCR primarily manufactures point-of-sales (POS) terminals, barcode scanners, cash registers, and financial machines such as ATMs; it also makes and markets business computers, massively parallel processors, and servers. NCR offers customer services for its products and information technology consulting, as well as producing smaller items such as business forms, labels and ribbons.

Foolishly, what might we think about NCR's stock? Well, it may very well be "undervalued" (see the January 21st, 1997 Fool's Lunchtime News opinion by MF Templar), but fiscally it makes sense for us to sell our measly eight shares now, commission-free, rather than wait five months and then pay full-commissions upon selling.

For kicks, let's look at some numbers, keeping in mind the current market cap of $3.53 billion and the fact that AT&T paid $7.4 billion in 1991 for NCR:

Trailing 12 month sales: $6.96 billion

Market cap: $3.53 billion

Price to sales: 0.50

Trailing 12-month earnings per share (fy1996): loss of $1.07

Operating profit in 1996: $75 million

Operating profit in 1995: Loss of $722 million.

Q4 1996 earnings: $7 million ($0.07/share) on $2.07 billion sales

Earnings estimate for fy1997: $0.77 (1 analyst)

Latest gross margins: 28%, up from 21%

Cash on hand: $1.2 billion

Debt: $76 million

Shareholders' equity: $1.6 billion

Though only one analyst currently covers NCR and expects the company to earn $0.77 per share this fiscal year, the positive earnings in the fourth quarter bode well that this lone analyst may be onto something. At least NCR can hope for a profitable year, finally, thanks to its new-found freedom from AT&T. It will be interesting to watch the company's progress from afar.

As of December 31st, 1996, NCR employed 38,600 people worldwide, including contractors. The company's computer systems, store automation, banking systems, consulting services, and support services are used by customers in more than 130 countries.

To all of this, we bid farewell our eight shares, and sincerely wish NCR and all its people all the best. It was fun to own eight shares -- there's something Foolish about that -- but it's also Foolish to cut costs by selling these shares commission-free while possible.

Fool on, NCR! And Fool on, Fools!