What the heck is going on at Diebold (NYSE:DBD) these days? For yet another quarter, this maker of ATMs, electronic voting machines, and security systems has come up with excuses for lackluster and disappointing performance.
In this latest episode, Diebold has cut its second-quarter outlook because of sluggish ATM sales in North America. Apparently, the expected upgrade cycle is moving along more slowly than the company had anticipated.
As a result, not only is the company not reaping these sales, but also a larger proportion of revenue is coming from the election-systems business and international customers. Worse, international sales (and election equipment) carry lower margins, and the company has also been hurt by the strengthening of the dollar versus the euro.
Management is now looking for earnings of $0.54 to $0.57 per share, adjusted for restructuring charges. Those figures compare with the prior mean analyst estimate of $0.64 and will mark the fourth time that the mean number has fallen in the past 90 days. For the full year, Diebold is now projecting $2.60 to $2.70 per share in profits -- below the mean estimate of $2.97.
Perhaps not surprisingly, more restructuring is coming down the pipe. Up to 300 jobs will be cut in North America and Western Europe, and there will be additional "manufacturing realignment" designed to curtail costs. Investors should note that that figure of 300 includes the 110 or so jobs that will be lost from the previously announced closing of the Danville, Va., plant.
Finally, Diebold also announced that management had uncovered an accounting mistake whereby the commission sales accrual account was short by about $13 million. Given that I've ripped into this company enough already, I'll let this one go for now. Accounting mistakes happen from time to time, and I doubt that this is anything but a mistake.
This is by no means a favored stock of mine -- in no small part because of the series of excuses about why the company has underperformed. Management is paid, and paid pretty well, to deliver results. Until those results start looking strong again, I can't see a compelling reason to buy this stock.
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned.
