DIEBOLD Vote machines bring company a load of grief

Diebold says it will stick with its product despite controversy.
NORTH CANTON (AP) -- After the Florida punch-card debacle hurt the credibility of the last presidential election, ATM maker Diebold Inc. decided it should expand into electronic voting.
"In November of 2000, I was embarrassed for this country," said Walden W. O'Dell, Diebold's chairman and chief executive.
The Florida fiasco also inspired Congress, which appropriated $3.9 billion for an overhaul of the nation's voting systems -- one that was to be fueled by technology promised by the likes of Diebold.
But Diebold has yet to realize large rewards for its shift into electronic voting.
Instead, it has reaped a storm of criticism and even a call for a criminal investigation by California's top election official, who banned the company's newest touchscreen voting computers April 30, citing concerns about security and reliability.
No paper record
The Diebold ballot appears on a portable screen that voters touch and confirm, and votes are stored on memory cards. But because the machines do not produce a paper record for each vote, critics say proper recounts are impossible.
Computer security experts say the Diebold machines -- and those of rivals -- have been carelessly developed and are too vulnerable to tampering and malfunction.
The onslaught has slowed sales and forced the company to lower financial expectations for Diebold Election Systems, the subsidiary that makes the touchscreens.
North Canton-based Diebold supplied 55,600 touchscreen voting stations for the March 2 "Super Tuesday" primaries, mostly in Maryland, Georgia and California. A competitor, Election Systems & amp; Software of Omaha, Neb., has installed about 36,000 screens.
Hacker
Diebold's e-voting system was first stung by criticism last year when an unidentified hacker managed to obtain the company's software blueprints, known as source code, along with e-mails and other documents.
And during the primaries, vote counts in Maryland were delayed because of modem glitches, and machines in much of California's San Diego County malfunctioned, potentially disenfranchising hundreds of voters.
Diebold argues that the security concerns are unfounded and blames human and mechanical errors.
"Elections are conducted by state and local officials, not by individual vendors, and that seems to get lost," said Bob Urosevich, chief executive of Diebold Election Systems.
Other branches
While the election subsidiary has struggled financially, the rest of Diebold, mainly ATMs and safes, has thrived. Election systems was the only Diebold unit to post lower sales last year than in 2002.
Although Diebold's stock price appears hardly to have been affected, some analysts wonder whether Diebold will have the fortitude to remain much longer in the election tech market, which represents only 5 percent of its overall business.
But O'Dell told shareholders recently that Diebold has no intention of quitting and "will ultimately produce the solutions that this country wants in a very fair and open way."
Diebold had expected its election systems revenue to grow to as much as $170 million in 2004, from about $100 million last year, based largely on revenue from Ohio's conversion from punch cards. The company now expects election systems revenue in the $80 million to $95 million range.
Overall, the company earned $175 million last year on sales of $2.1 billion.