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Brazil orders more voting machines from Diebold

December 21, 2010

The Superior Electoral Court of Brazil has placed a much larger order for voting machines with Diebold Inc. as part of an extended agreement between both parties.

The court, also known as TSE, ordered 117,500 voting terminals from Procomp Amazonia Industria Electronia S.A., Diebold's Brazilian subsidiary, according to a United States Securities Exchange Commission filing.

In a Dec. 16 SEC filing, Diebold projected revenues of $70 million and $75 million from the sale. Diebold is scheduled to deliver the machines in the second half of 2011. Prior to the agreement extension, The Superior Electoral Court has ordered 195,000 electoral voting machines from Diebold.

According to a 2009 agreement between the Superior Electoral Court and Diebold, the court could have purchased up to an additional 55,000 machines to meet the contract's terms. In his analyst report, Gil Luria, senior vice president of Equity Research and Financial Technology at Wedbush Securities, said the extension order was "2x expectations." The court is the highest institution for electoral justice in Brazil.

Because of the good news, Luria raised Diebold's stock target price to $34 per share from $31.81 per share on Tuesday. In early afternoon trading Wednesday, Diebold stock was selling at $32.44 per share.

Luria also said Diebold's outlook for ATM orders by smaller U.S. banks continues to improve.

"We believe smaller banks were the main contributor to North America order growth of 9 percent year-over-year," Luria wrote.

Diebold, which has its headquarters in North Canton, Ohio, is the world's third-largest ATM manufacturer based on annual shipments.

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