http://quote.bloomberg.com/apps/news?pid=nifea&&sid=alE76fVHoxr8Diebold's Voting Machine Expansion Rattles Investors, States May 21 (Bloomberg) -- Diebold Inc. Chief Executive Officer Walden O'Dell says his company won't stop making voting machines, even though states challenge their reliability and investors say there's too little profit in the effort.
...``We walked into a minefield and maybe made some mistakes along the way,'' says O'Dell, who wears a tie dotted with American flags. ``Our heart and soul and energy are all in the right place here.''
Don Taylor, who manages $1.8 billion in the Franklin Rising Dividends Fund, says he wishes that North Canton, Ohio-based Diebold would stick to making automated teller machines and safes. The voting-machine unit was the worst performing of any of Diebold's three divisions last year. Sales of voting machines fell 9.7 percent, the company reported in January. Profit from voting machines dropped 32 percent to $6.4 million. It was the only Diebold unit reporting declines. Diebold has had average annual revenue growth of 31 percent over the past five years.
`Sell the Business' ``The voting machine business has been a disappointment since they got into it,'' Taylor says. ``I'd like to see them sell the business, personally, though I highly doubt that's going to happen.''
Diebold shares have fallen 12 percent this year, dropping 30 cents to $47.40 at 4:02 p.m. yesterday in trading on the New York Stock Exchange. It's not because of the company's financial performance, says Taylor, whose Fort Lee, New Jersey, fund holds 502,000 Diebold shares. Investors are selling Diebold shares because the company makes touch-screen voting machines.
O'Dell says he considers it his public duty to press ahead with voting machines...
In Georgia, Diebold's machines might have been tampered with by the company just before the 2002 Senate and gubernatorial elections, says Bev Harris, a journalist who's written a book critical of the voting industry (``Black Box Voting: Ballot Tampering in the 21st Century,'' 2004,). Harris says a Diebold worker replaced the software to improve efficiency on all of the machines in the state in the weeks before the elections...
Didn't Change Outcome ``We have a situation where one guy made program changes that counted a million votes and no one knows what he did,'' Harris says. She says she has no proof that the changes had an effect on the election's results. ``It could be perfectly benign,'' she says.
The programmer was performing routine maintenance, says Diebold spokesman Mike Jacobsen. ``It had nothing to do with the software used to tabulate votes,'' he says.
The Diebold machines didn't have any effect on the elections, says University of Georgia political science professor Charles Bullock, who says he's a political independent.
...The error might cost Diebold sales, particularly among states whose officials are Democrats, says Stephen Tabb, who helps manage $3 billion for New York-based Toque Ville Asset Management LP.
``At first, I was giving them the benefit of the doubt with this voting machine business,'' says Tabb, who sold his Diebold shares last month. ``I feel they haven't been doing a good job in that area, and they are going to lose out.''...
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