Cash is king at Diebold. The company is one of the leading producers of automated teller machines (ATMs). In addition, Diebold offers remote teller systems, cash dispensers, and check cashing machines. Originally a manufacturer of safes, the company is still active in its original market, offering products that include vaults and security systems for financial institutions. Diebold also provides electronic voting machines through its Procomp Indústria Eletrónica subsidiary in Brazil. Its services range from product maintenance to installation consulting and plan design. Diebold, which has operations in about 90 countries, gets around three-quarters of its sales in the Americas.
Revenue rose about 4% in 2010 compared with 2009. Total gross profit was up more than 10%. The company also enjoyed a slight increase in its product gross margin, 24.5% in 2010 versus 23.8% in 2009, which the company attributes mainly to its Brazil voting and lottery products. Service gross margin rose higher, 26.3% in 2010 compared with 24% in 2009, caused primarily by improved production and lower expenses for service parts scrap in the US.
The company's largest product segment, financial self-service, accounts for more than 70% of its revenues. Diebold is targeting check imaging, envelope-free currency acceptance, teller automation, and other payment and document imaging products for growth.
Diebold's growth strategy is also focused largely on becoming more service-oriented, and the company now generates more than half of its revenues from maintenance and other services supporting its self-service and security product lines. In addition to traditional maintenance services, Diebold offers outsourced and managed services, such as remote monitoring, transaction processing, and currency management.
The company has been taking steps to become more efficient in its manufacturing, procurement and logistics, and product development, as part of a multiyear program aimed at reducing its costs. Its efforts have included consolidation of its manufacturing and distribution operations, as well as job cuts.
In 2009 Diebold sold its Premier Election Solutions subsidiary to Election Systems & Software for $5 million in cash. The company identified its US election systems business as a noncore line of business in 2006 and renamed it Premier Election Solutions the following year. Premier operated as an autonomous subsidiary and posted 2008 sales of about $88 million.
The US election systems business became an operating and political liability for Diebold as the company was sued by the State of California over alleged problems of reliability and security with its voting machines. Diebold settled the suit with a cash payment to the state. After Diebold entered the US voting machine market in 2002, controversy arose the following year when Walden O'Dell, then the company's chairman and CEO, raised money for the re-election of President Bush and urged other Republicans in Ohio (where Diebold makes its headquarters and where it supplied voting machines in some jurisdictions) to support the president's bid.
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