Diebold reports revenue, net loss; job cuts on the way

Diebold reports revenue, net loss; job cuts on the way
Tags: Diebold, Incorporated, Manufacturers, North America, Public Companies
May 4, 2009

NORTH CANTON, Ohio — Diebold Inc. reported revenue and net income losses for the first quarter of 2009. As a result, the company says it has lowered its full-year earnings per share guidance.

Revenue for the quarter was $663 million, down 4 percent from last year. Net income for the quarter was $3.8 million, 6 cents per share, down from the $15.5 million, 22 cents per share, the company reported a year ago.

"In the first quarter, the global economy continued to experience unprecedented challenges and, unfortunately, Diebold was not immune to these challenges," said Tom Swidarski, president and chief executive. "As the quarter progressed, the earlier weakness in orders that we had experienced in Eastern Europe, Russia and the regional bank segment of the United States became more precipitous. This market weakness, which occurred in some of our most profitable business sectors, has forced us to reduce our revenue and earnings expectations for the full year 2009. Given these developments, we have taken steps to accelerate our existing cost-reduction initiatives as well as implement additional, near-term cost-saving actions. These additional actions include implementing further headcount reductions through hiring restrictions, attrition and job eliminations — representing an overall reduction of approximately 300 full-time positions."

Total product and services orders for financial self-service and security were, and global financial self-service orders decreased in the mid single-digit range, driven primarily by a decrease of more than 40 percent in Europe, the Middle East and Asia. Financial self-service orders in Asia-Pacific, however, increased more than 30 percent, while orders increased in the mid single-digit range in the Americas.

Security orders decreased as new bank branch construction and retail store openings remain weak in the United States.

"I am pleased with our first quarter operating results, which exceeded our internal expectations, driven primarily by stronger than expected performance within our Asia-Pacific operations," Swidarski said. "We continue to experience solid market demand in A-P, Latin America, including Brazil, and within the national bank segment in the United States. In addition, we continue to focus on services as a key component in our long-term growth strategy. Despite a challenging environment, our service revenue and profitability improved quarter over quarter. We expect the improvement in service profitability will gain additional momentum as the year progresses."

Diebold also reached an agreement in principle with the staff of the Securities and Exchange Commission to settle civil charges stemming from the staff's pending enforcement inquiry. The agreement remains subject to final approval, and there can be no assurance that the SEC will accept the terms of the settlement negotiated with the staff. In connection with reaching this agreement, Diebold recorded a charge of $25 million during the quarter.

The company incurred restructuring charges of 5 cents per share during the quarter, the majority of which related to the January sale of the company's direct operation in Argentina, as well as severance costs related to the reduction in the company's global workforce during 2008.