Magazine article American Banker

4Q EARNINGS: Bright Spots the Exception as Diebold Reports Results

Magazine article American Banker

4Q EARNINGS: Bright Spots the Exception as Diebold Reports Results

Article excerpt

Byline: Frederick H. Lowe

Strong sales of advanced automated teller machines to a handful of big banks was one of the few bright spots in the fourth quarter at Diebold Inc.

The North Canton, Ohio, company said Wednesday that sales of ATMs slipped in almost every region and market segment, driving down both revenue and income in the quarter.

Tom Swidarski, Diebold's president and chief executive, said during a conference call with analysts to discuss the results: "The Big Three banks - Bank of America, Wells Fargo, and JPMorgan Chase - are aggressively deploying intelligent-deposit ATMs, with Bank of America being the furthest along."

However, though a few credit unions and small banks are also beginning to buy intelligent-deposit ATMs - machines that do not require an envelope for deposits and have technology to convert deposited checks into electronic images - few regional banks are following suit.

"There are some small pilots, but otherwise they are not engaged," Mr. Swidarski said. "The executives are under a lot of stress because of the economy. Demand in regional accounts continued to weaken during the quarter."

Midsize banks "remain conservative with capital deployments in this recessionary environment," he said, and consolidation in the banking industry is affecting service revenue, which accounts for about half the company's overall top line.

"We had an integrated services contract for $15 million with one bank," Mr. Swidarski said, "but the bank was purchased and now [the] contract is up in the air."

Though ATM demand in Brazil remains strong, Diebold reported declines in ATM shipments to Western Europe, Eastern Europe, Russia, and China. In Asia, ATM orders declined in the fourth quarter largely because China installed significant numbers of ATMs in advance of last summer's Olympic Games in Beijing, Mr. …

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