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Diebold to make elections subsidiary more independent, efforts to sell fail
August 15, 2007
NORTH CANTON, Ohio —Diebold Inc.has announced plans to create a new structure for its election-systems subsidiary that will allow it to operate more independently, since efforts to sell the subsidiary have been unsuccessful.
The company said Aug. 16 that it is revising its full-year revenue expectations associated with the elections business.
"As a result of the rapidly changing political environment and pending legislative initiatives related to electronic voting, several large anticipated orders for electronic voting systems have moved from 2007 into 2008 and beyond," Diebold said in a statement. "Competing federal legislation in the U.S. House of Representatives and U.S. Senate, both related to the use of specific elections technologies, has created uncertainty amongst the jurisdictions that make purchasing decisions. In addition, several states have initiated separate, independent reviews of voting technology within their jurisdictions."
The company is lowering its full-year revenue expectations for the elections business by approximately $120 million. Diebold estimates the revenue adjustment will adversely impact its full-year earnings per share by approximately 27 cents. Previous full-year guidance for the business had been between $185 million and $215 million.
Because of the regulatory flux surrounding elections systems, Diebold says it has postponed efforts to divest the company.
Diebold Elections Systems will have a separate board and a new management. Dave Byrd is expected to remain president of the elections-systems business. A formal name change also is expected.
Diebold also says it has not ruled out the possibility of divesting a portion or all of its ownership in the realigned elections company.
"Given our concerted evaluation of all strategic alternatives available to us at this time, this is the most appropriate course of action for Diebold and all its stakeholders," said Thomas W. Swidarski, Diebold's president and chief executive. "While we plan to fully support this business for the foreseeable future, we feel a more independent structure should allow it to operate more effectively. Establishing the elections business as a separate entity will also allow our senior management team to fully focus our efforts on Diebold 's core global businesses in financial self-service and security."
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