Magazine article American Banker

Diebold Paying for Blunder Abroad

Magazine article American Banker

Diebold Paying for Blunder Abroad

Article excerpt

The closing of an international joint marketing venture is coming back to haunt Diebold Inc.

The Canton, Ohio, maker of automated teller machines said last week that its second-quarter revenues had fallen 7%, to $280.5 million.

That helped produce a loss of $14.4 million, or 21 cents a share, compared with net income of $30.7 million, or 44 cents, a year earlier.

Banks' preoccupation with mergers and the year-2000 problem extended the sales cycle for many products, Diebold officials said. But they have also come to regret the lack of an overseas distribution channel.

International Business Machines Corp. had been Diebold's major reseller internationally through a joint venture called Interbold, which lasted seven years until IBM decided to pull out last year.

Observers said Diebold paid a favorable price in buying out IBM's stake but neglected to develop a distribution mechanism in its place. Overseas revenue accounted for about 25% of Diebold's $1.2 billion total in 1997.

During an investor conference call, Diebold chairman and chief executive officer Robert W. Mahoney said, "We made a mistake in allowing the IBM discussions to drag on too long.

"We are now moving forward with our plans for our own international distribution, which involves basically a model of direct sales representation for the major accounts and distributors for the middle market."

Diebold also recently undertook a "realignment" project, aimed at driving down costs by $22 million annually. In addition to eliminating more than 600 jobs through early retirements, the company would reduce its use of part-time contract workers, consolidate facilities, and write off certain assets and discontinued product lines. …

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