News

Diebold facing potential voting problems

May 8, 2004

NORTH CANTON, Ohio-In 2003, Diebold won the largest voting contract in the U.S., a deal worth $55 million, in Maryland, according to an article on ATMmarketplace.com.  It has sold 65,000 voting terminals since entering the business in the U.S. in 2002, mostly in California, Georgia and Maryland.

In 2004's first quarter, however, the company was dogged by questions surrounding the security of its voting systems. California last week decertified touchscreen voting systems such as those manufactured by Diebold, a move that will prevent 14 counties from using their newly acquired terminals. Six of the 14 affected counties use Diebold equipment.
In April, a Maryland group called the Campaign for Verifiable Voting filed a lawsuit asking for paper back-up records of electronic voting in that state.

The company's electronic voting subsidiary, Diebold Election Systems, "accounts for three percent of our revenues and 100 percent of our publicity," Evans said at the PIX conference.
Evans expressed confidence that will change, when more specific standards are introduced in the U.S. Ninety percent of the votes in Brazil are cast on Diebold terminals (following Diebold's 1999 acquisition of Procomp Industria Eletronica), and the company's machines have been used in 450 elections in Georgia since November of 2002. "Once the standards are set, we think we'll have the technology solutions," he said.

The company is currently developing a voter-verifiable paper receipt because of customer requests, Evans said. "We're happy to sell the printers if customers want them."
Like ATMs, Evans said, voting terminals "all require service," another area of revenue generation for Diebold.

While the company recently reaffirmed its earnings forecast of $2.58 to $2.70 EPS for 2004, it has scaled back revenue expectations for its voting subsidiary to $80 million to $95 million for 2004. The voting business contributed a little more than $100 million in earnings in 2003.