The Suburbanite
  • Diebold earnings fall

  • Diebold saw its 2012 profits cut in half, partly because of canceled automatic-teller-machine orders by Brazilian banks and changes with regional banks in the United States.

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  • Diebold saw its 2012 profits cut in half, partly because of canceled automatic-teller-machine orders by Brazilian banks and changes with regional banks in the United States.
    The company ended 2012 with profits of  $78.5 million, or $1.23 per share, but that was down when compared with $144.8 million, or $2.24 per share, in 2011. Diebold posted revenue of $2.99 billion compared with $2.84 billion last year.
    A poor fourth quarter showing enhanced the drop. Diebold posted a fourth-quarter loss of $10.6 million, or 17 cents per share, compared with profits of $79.8 million, or $1.26 per share, in the 2011 fourth quarter. The loss came on sales of $840.1 million, down from $850 million the previous year.
    The results were disappointing and need to be improved, said Henry D.G. Wallace, a board member who became executive chairman in January.
    Wallace told investment analysts during a conference call to discuss the results that Diebold has a good strategy for growth. Wallace said Diebold “is far from being a broken company, but it is an underperforming company.”
    Poor performance led to changes in Diebold’s ranks.
    In addition to Wallace’s stepping in as executive chairman, the company dismissed Thomas W. Swidarski as president and chief executive officer. It began a search for a new chief executive officer and named George S. Mayes Jr. as chief operating officer.
    The search for new leadership and poor financial performance isn’t a sign that Diebold is changing direction. Wallace and Mayes said the company will maintain its strategy, which includes efforts to broaden the electronic security business.
    “We believe we have the strategies, team and ability to change our trajectory,” Wallace told analysts.
    Diebold’s electronic-security business improved during 2012, and the goal is to build on that business. Wallace told analysts that Diebold is reviewing opportunities to purchase an electronic-security company as a “beachhead” and then “bolt on” smaller companies to expand in the market.
    “The board has endorsed that strategy, and we’re committed to expand,” Wallace told analysts, noting that a move could be made before a chief executive is hired.
    Diebold ran into problems as teller-machine orders from regional banks dipped, while orders from larger national banks increased. The company also saw two banks in Brazil cancel large teller-machine orders. The company expects to see improvements in both of those areas, but they remain a variable during the coming year, said Mychal D. Kempt, vice president for North American operations.
    Wallace expressed caution for the coming year, suggesting that Diebold’s earnings will be flat or down modestly, while revenue remains flat. He also expects the first quarter will be slow.
    Diebold closed at $30.07, down 2 cents per share from Monday, in heavier-than-average trading.
    Firm helps in CEO search
    Diebold has hired a firm to conduct a worldwide search for its next chief executive officer.
    Page 2 of 2 - Executive Director Henry D.G. Wallace told stock analysts Tuesday that Diebold is working with Korn/Ferry — considered the world’s largest executive-search company — to find a replacement for Thomas W. Swidarski.
    There is no set time frame for completing the search, “but we will focus on finding the right person as soon as possible,” Wallace said.
    Diebold’s board is conducting the search, with Rick Crandall, a member since 1996, leading the search team. Wallace noted that Crandall has an extensive software-and-technology background.
    In January, the board dismissed Swidarski as president and chief executive. Directors cited the company’s poor financial performance, although they endorsed the company’s strategies. The board appointed George S. Mayes Jr. as chief operating officer.

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