Diebold looks to bail on BBV business

Diebold Weighs Strategy for Voting Unit
Associated Press

Diebold Inc. saw great potential in the modernization of elections equipment. Now, analysts say, executives may be angling for ways to dump its e-voting subsidiary that's widely seen as tarnishing the company's reputation.

Though Diebold Election Systems - the company's smallest business segment - has shown growth and profit, it's faced persistent criticism over the reliability and security of its touch-screen voting machines. About 150,000 of its touch-screen or optical scan systems were used in 34 states in last November's election.

The criticism is particularly jarring for a nearly 150-year-old company whose primary focus has long been safes and automated teller machines.

"This is a company that has built relationships with banks every day of every year. It pains them greatly to see their brand tarnished by a marginal operating unit," said Gil Luria, an investment analyst who monitors Diebold for Wedbush Morgan Securities Inc.

They have no one to blame but themselves for this. And if I were a bank, I'd be damned leery of anything Diebold told me or promised me about their products, given the blizzard of lies and criminal deceptions the company has engaged in.

The major challenge that Diebold faces now is that no one is going to buy a company so totally discredited as this one. It would be easier to sell Titanic brand cruise ships, or Hindenburg brand zeppelins than a Diebold voting machine company. Diebold's name has become synonymous with deceit, inaccuracy, and corrupt politics, and rightly so.

Diebold has always defended its voting machines and its own intentions, even after its former chairman and chief executive, Wally O'Dell, sought with little success to convince critics his strong ties with Republican politics as a fundraiser for George W. Bush were not the motive for the company's involvement in elections.

See what I mean?

Might Diebold choose to keep the voting business and grow it?

"It's a possibility, but I'd assign it a very low probability," Luria said.

Voting machine makers such as Diebold; Election Systems & Software, of Omaha, Neb.; Sequoia Voting Systems, of Oakland, Calif., and Hart InterCivic, of Austin, Texas have had the federal Help America Vote Act of 2002 as a sales catalyst. HAVA, with $3.9 billion of funding, urged the nation to move past punch card voting and hanging chads that delayed the conclusion of the 2000 presidential election.

ES&S, Sequoia and Hart InterCivic declined comment on a possible Diebold Election Systems sale.

The other companies have no reason to buy even Diebold's customer list, since they are going to get the customers anyway once Diebold bails out of the business. And they are hardly likely to invest in Diebold's universally reviled hardware/software.

Diebold may literally have to pay someone to take the company, otherwise they will be facing law suits from orphaned customers.

Douglas E. Rodgers, managing partner and chief executive officer of Washington-based investment banking firm FOCUS Enterprises Inc., said he has worked with Diebold executives on recent acquisitions. He could not comment on Diebold's intentions for voting systems.

Kimball Brace, who closely tracks voting system vendors as president of Washington-based Election Data Services Inc., said there is uncertainty now in the elections market, a result of possible legislation setting new requirements with no promise there will be additional funding.

He couldn't say what Diebold will do.

"If I were in these guy's shoes, I'd be looking close and hard at what I'm doing in this marketplace," Brace said. "But given the uncertainty, who would buy it?"

Indeed!

And when all is said and done, it will be BBV - 0, anti-BBV activists - 1