Magazine article American Banker

Diebold 2Q ATM Sales Disappoint

Magazine article American Banker

Diebold 2Q ATM Sales Disappoint

Article excerpt

The North Canton, Ohio, automated teller machine maker Diebold Inc. said second-quarter sales to regional banks in North America fell short of expectations, and it slashed its earnings guidance and announced more job cuts.

Diebold said it had not appreciated how good business was a year earlier, when many such banks were upgrading to the Triple Data Encryption Standard. MasterCard International has given banks a yearend deadline to adopt the standard, but most have already done so, the ATM maker said.

"Most of that is behind us, but other things that should drive upgrades certainly are right in front of us," Walden W. O'Dell, its chairman and chief executive, said in a conference call last week.

Diebold's management "underestimated how great last year was in the second quarter," Mr. O'Dell said. "We had a lot of upgrade activity and really strong performance in that quarter."

Nevertheless, Reik W. Read, an analyst at Robert W. Baird & Co., wrote in a report published June 30 that in his last survey 75% of banks, which have 64,000 ATMs combined, indicated they are not compliant with the standard. And the fact that 30% of the banks have received a waiver from MasterCard suggests that "more upgrade activity will likely occur," he said.

Diebold said it expects to report full-year earnings of $2.60 to $2.70 a share, excluding charges of 19 cents to 34 cents. For the second quarter, it now expects to post earnings of 47 cents to 50 cents a share. Excluding restructuring charges and European manufacturing start-up costs, it would post earnings of 54 cents to 57 cents. …

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