Expected NCR Profit Drop May Hurt Its Takeover Fight

NCR Corp. is expected to report disappointing first-quarter earnings next week, industry analysts said Monday, putting added pressure on the computer maker to negotiate an end to its takeover fight with American Telephone & Telegraph Co.

While not commenting directly on the expected figures, NCR Chairman Charles E. Exley Jr. admitted Monday that a poorer-than-anticipated profit could undermine his bargaining position with the telephone company and his own shareholders.

In an attempt to decrease the attractiveness of AT&T;’s takeover offer, Exley has told shareholders that NCR can boost its stock price above AT&T;’s offering price through increased earnings in coming quarters.

“We have to show earnings power” to justify this position, Exley said in a telephone interview.

Exley did say that if his company expected earnings to be sharply lower than estimates by stock analysts, it would have said so in advance.

Three weeks ago, International Business Machines Corp. announced that its first-quarter profit would be about half of that estimated by analysts, a bombshell that caused its stock price to slide.

“So many computer companies have indicated the March (first) quarter will be weak, so by implication we can assume that NCR’s March quarter will be weak,” said analyst Jay Stevens of Dean Witter Reynolds Inc.

Stevens said he expected that NCR would not meet his estimate of a profit of about $36 million for the quarter ended March 31.

In last year’s first quarter, NCR earned $52 million on revenue of $1.27 billion.

In addition to the computer industry slump, NCR faces the added drain of its takeover defenses, including fees to legal and financial advisers and full-page newspaper ads soliciting shareholder loyalty.