Diebold fires COO; cuts earning forecast

Diebold fires COO; cuts earning forecast

Struggling US ATM manufacturer Diebold has sacked its president and chief operating officer Eric Evans and cut $50 million from third quarter revenue forecasts.

In a statement Diebold says Evans is leaving the company and has resigned from its board of directors. Chairman and CEO Walden O'Dell is to take direct responsibility for the firm's global operations.

Says O'Dell: "Our recent financial performance has been unacceptable, and these organisational changes are a major step toward improving our direction...I am assuming direct responsibility of the company's operations, and I am personally committed to taking immediate action to improve our performance."

As part of the shake-up, Diebold says a new financial self-service business unit combining product and software development, manufacturing, procurement and marketing will be established, headed by Thomas Swidarski, who assumes the role of senior vice president, financial self-service group.

Sales and service operations for both financial self-service and security will remain unchanged. Swidarski will retain oversight responsibility of Diebold's Election Systems (DES) division, although day-to-day management of the business will be handled by David Byrd, vice president of operations for DES.

News of Evans' departure surfaced as the company cut its third quarter and full year earnings forecasts due to lower than expected financial services revenue in North America, lost revenue from Hurricane Katrina and rising fuel costs.

Dieobold says total financial self-service revenue is expected to be more than $50 million lower during the current quarter compared to previous expectations, with most of the shortfall occurring in North America where the company experienced continued market weakness in the more profitable regional bank segment.

The lowered revenue expectations are also a result of customer delays and operational inefficiencies that were compounded by Hurricane Katrina, which affected scheduled ATM deliveries, security installations, service maintenance contracts and other business throughout the Gulf region.

The company says it now expects third-quarter earnings to be between 32 cents to 37 cents per share. The forecast includes restructuring charges of seven cents per share, manufacturing start-up costs of four cents per share, and a one-time gain of 18 cents per share from the sale of its campus card systems business.

Excluding these items, third-quarter earnings are expected to range from 25 cents to 30 cents per share.

For the full year, Diebold is forecasting earnings from $1.90 to $2 per share, excluding items, compared with last year's reported earnings of $2.53 per share.

"We continue to be adversely affected by significantly unfavorable geographic revenue mix as the North America market for ATMs has weakened, particularly among regional banks," says O'Dell. "In addition, we are experiencing global supply chain and manufacturing inefficiencies and rising commodity costs, which were exacerbated by Hurricane Katrina."

O'Dell says in response to this Diebold is introducing price increases in "appropriate areas". He says the firm is also evaluating further restructuring and other actions to improve performance and competitiveness.

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