Diebold's profitability not enough to stop share selloff

Aug. 07--Diebold's return to a profitable second quarter following a loss a year ago wasn't enough to keep its stock from falling on Wednesday.

The Green automated teller machines, security systems and software firm earned $41.6 million, or 64 cents per share, on revenue of $733.5 million for the quarter ending June 30. A year ago, Diebold had a loss of $105 million, or $1.65 a share on lower revenue.

Shares fell $1.70 to $36.3. Diebold's earnings beat analyst estimates while revenue fell short. Shares are up 11.7 percent, including dividends, since Jan. 1 and are up 20.1 percent from a year ago.

Diebold reaffirmed its earnings and revenue guidance for the year.

"We delivered strong performance with solid revenue growth in line with our expectation," Andreas Mattes, president and chief executive officer, said in a conference call with industry analysts.

"We continue our focus on becoming a services-led, software-enabled company," Mattes said. "Services and software continued to make up the majority of our total revenue year to date at 57 percent."

Diebold executives said that ATMs, because they are hardware appliances, are becoming commodities and harder to differentiate in the market.

Diebold continues to make progress in its turnaround plan, Mattes said.

"We recognize the majority of the heavy lifting remains in front of us, as we're a company in transformation, we're not transformed," he said. "We are meeting our near-term objectives and remain confident in our long-term outlook."

Chris Chapman, Diebold's new chief financial officer, said the company is demonstrating tangible results from its turnaround plan.

"We have started off the first half of the year stronger than expected," he said.

Jim Mackinnon can be reached at 330-996-3544 or jmackinnon@thebeaconjournal.com

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