Diebold Exits Voting Machine Business
ATM maker Diebold Inc. has sold its much-criticized U.S. voting-machine business to its bigger competitor, Election Systems & Software Inc. of Omaha, Nebraska.
Diebold, based in North Canton, announced the sale of its Allen, Texas-based subsidiary Premier Election Solutions Inc. on Thursday and said it will get $5 million plus payments representing 70 percent of collections of the unit's accounts receivable as of Aug. 31.
Diebold said it would disclose the additional payments at a later date.
Diebold expects to recognize a pretax loss on the deal in the range of $45 million to $55 million.
Last year Premier generated 2.8 percent of Diebold's revenue. Diebold faced repeated criticism of the reliability and security of its touch-screen voting machines and began looking for a buyer for Premier more than two years ago.
In 2007, Diebold distanced itself from the election unit, renaming it Premier, allowing it to operate more independently and giving it a separate board of directors.
Its touch-screen voting machines used in elections across the country often drew criticism that the technology could be manipulated. The company has insisted touch-screen voting is reliable and an improvement over punch-card ballots that resulted in the disputed recount in Florida during the 2000 presidential election.
The sale reflects Diebold's decision three years ago to focus on key markets, including ATMs and security systems, according to spokesman Mike Jacobsen. The company is determined to move forward and not reflect on past election-system problems, he said.
"The elections business has been a PR nightmare and a huge distraction for management," Gil Luria, vice president of research for Wedbush Morgan Securities Inc. in Los Angeles, told the Cleveland Plains Dealer.
"This has been a black eye for them for as long as they've owned it," he said.
Diebold's Brazilian subsidiary, which makes voting machines for Brazil's national elections board, is unaffected by the Premier sale.
Premier has about 180 employees in the United States and Canada. Premier operates in 33 states and ES&S operates election services in 39 states and overseas.
Aldo Tesi, ES&S president and CEO, said the company was determined to fulfill its responsibilities in the high-profile voting-machine market.
"This acquisition is an opportunity to continue fulfilling our company's core mission of maintaining voter confidence, and enhancing the voting experience," he said in a statement.
Candice Hoke, an election law professor at Cleveland State University, said the sale raises questions about the consolidation of election services. "It's a massive consolidation of voting-system vendors," she said.
The increased size and influence of ES&S could make it harder for smaller, innovative companies to enter the market, she said. "The market power (of ES&S) will be so significant," she said.
At the same time, Hoke said, ES&S's growth could allow it to spend more on research to develop better voting machines.
© 2009 CBS Interactive Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report. Diebold, based in North Canton, announced the sale of its Allen, Texas-based subsidiary Premier Election Solutions Inc. on Thursday and said it will get $5 million plus payments representing 70 percent of collections of the unit's accounts receivable as of Aug. 31.
Diebold said it would disclose the additional payments at a later date.
Diebold expects to recognize a pretax loss on the deal in the range of $45 million to $55 million.
Last year Premier generated 2.8 percent of Diebold's revenue. Diebold faced repeated criticism of the reliability and security of its touch-screen voting machines and began looking for a buyer for Premier more than two years ago.
In 2007, Diebold distanced itself from the election unit, renaming it Premier, allowing it to operate more independently and giving it a separate board of directors.
Its touch-screen voting machines used in elections across the country often drew criticism that the technology could be manipulated. The company has insisted touch-screen voting is reliable and an improvement over punch-card ballots that resulted in the disputed recount in Florida during the 2000 presidential election.
The sale reflects Diebold's decision three years ago to focus on key markets, including ATMs and security systems, according to spokesman Mike Jacobsen. The company is determined to move forward and not reflect on past election-system problems, he said.
"The elections business has been a PR nightmare and a huge distraction for management," Gil Luria, vice president of research for Wedbush Morgan Securities Inc. in Los Angeles, told the Cleveland Plains Dealer.
"This has been a black eye for them for as long as they've owned it," he said.
Diebold's Brazilian subsidiary, which makes voting machines for Brazil's national elections board, is unaffected by the Premier sale.
Premier has about 180 employees in the United States and Canada. Premier operates in 33 states and ES&S operates election services in 39 states and overseas.
Aldo Tesi, ES&S president and CEO, said the company was determined to fulfill its responsibilities in the high-profile voting-machine market.
"This acquisition is an opportunity to continue fulfilling our company's core mission of maintaining voter confidence, and enhancing the voting experience," he said in a statement.
Candice Hoke, an election law professor at Cleveland State University, said the sale raises questions about the consolidation of election services. "It's a massive consolidation of voting-system vendors," she said.
The increased size and influence of ES&S could make it harder for smaller, innovative companies to enter the market, she said. "The market power (of ES&S) will be so significant," she said.
At the same time, Hoke said, ES&S's growth could allow it to spend more on research to develop better voting machines.
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ES&S is almost as bad. Their former CEO was Chuck Hagel, now an ex-Republican senator (he was "invited to leave" last year) he was CEO of ES&S in 1997 when ES&S machines were used to count votes in the election he was running in! Nothing like owning the company that produced the voting machines that were used to elect you to the senators office! ES&S also lost certification of one of their voting machines in 2007 in CA.
It's just as possible to steal a paper-ballot election as an electronic election, does anyone seriously believe that the Iranian election was not stolen? Of course it was - no electronic voting there.
States that want to use electronic voting need to investigate Ballot Browser - this is an open-source app (see http://www.tevsystems.com) - and it was used to discover that Diebold voting machines were improperly counting votes.
This says it all folks. Conservative southern companies simply can not be trusted!
Election issues and problems
1996
Chuck Hagel was CEO of American Information Systems Inc. (AIS), the same company that electronically counted 80% of the votes in the state in the very same election that he won his stunning upset. He did not disclose his position as CEO of the company in his mandated disclosures, until its name-change to Election Systems & Software (ES&S) in 1997. "Hagel?s ethics filings pose disclosure issue". The Hill. 2003-01-29. http://www.itu.dk/people/carsten/projects/e-voting/materials/hagel.pdf. Retrieved 2009-06-27.
2004
ES&S was one of the top four providers of voting companies used in the November 2004 election; the other three were Diebold Election Systems (now Premier Election Solutions), Sequoia Voting Systems and Hart InterCivic.
2006
After the November 2006 elections, Indiana launched an inquiry into poor service by the company, settling when it agreed to pay $750,000. West Virginia filed a formal complaint against the company with federal officials. Arkansas put together a panel to investigate. The company denied any major trouble with its machines, attributing problems to errors made by poll workers. [1]
2007
On August 3, 2007, California Secretary of state Debra Bowen withdrew approval of the ES&S InkaVote Plus optical scan voting system after a "top-to-bottom review" of the voting machines certified for use in California in March 2007.[2]
2008
Early voters in the 2008 Presidential election have reported instances of malfunctioning machines. People complained that they voted for one candidate, only to have their selection switch to another.[3] The clerk of Oakland County, Michigan reported inconsistent results with some machines during testing in October.