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Analysts happy with Diebold chief resigning

Analysts say the resignation this week of Diebold Inc.'s chief executive may help restore the credibility of the embattled automated-teller and voting machine maker.
/ Source: The Associated Press

Analysts say the resignation this week of Diebold Inc.'s chief executive may help restore the credibility of the embattled automated-teller and voting machine maker.

Walden W. O'Dell, 60, quit the company for unspecified personal reasons. The resignation came after several years of controversy surrounding the security and reliability of Diebold's touch-screen voting machines and O'Dell's ties to President Bush.

The company also slashed earnings expectations under O'Dell's reign because of rising costs.

In a statement Monday, Diebold said Chief Operating Officer Thomas Swidarski was named O'Dell's successor and will at least temporarily perform both jobs.

"The board is finally motivated to finding someone, either internally or externally, to better utilize the great assets that Diebold has. It's a great brand name," said Daan Coster, an analyst at Rochdale Securities in New York.

"There is really huge value within Diebold," said Coster, who rated Diebold shares a "buy," with a target price of $43.25, following the resignation. "It's just a matter of unlocking it."

Diebold spokesman Mike Jacobsen would not elaborate on the resignation.

A phone message was left Wednesday for O'Dell. When reached by The Associated Press on Monday, O'Dell said he would not comment about quitting.

"I wish Diebold well," he said before hanging up.

Jeffries & Co. analyst Yvonne M. Varano also boosted her rating on Diebold from "hold" to "buy," with a target price of $42.

"We're pleased with the change in management," she said. Varano credited Swidarski with good strategies for improving profits, such as switching how the sales force is paid.

At least one analyst wasn't as moved by the leadership change.

Ivan Feinseth of New York's Matrix USA reaffirmed a "sell" recommendation.

"All the things that are messed up don't get unmessed up because you have a new CEO," Feinseth said.

Diebold, whose main business is making ATMs and security systems, ventured into e-voting after the Florida punch-card debacle of 2000.

But the company's e-voting business has been bumpy.

In 2003, O'Dell gained national attention when he invited people to a fundraiser for Bush with a letter stating he planned to help "Ohio deliver its electoral votes to the president."

Critics said the maker of voting machines should not be involved in partisan politics. The company since has prohibited its top executives from making political contributions.

The problems slowed initial sales and forced the company last year to lower financial expectations for Diebold Election Systems, the subsidiary that makes the touchscreens.

Diebold addressed some security concerns by offering receipts for touch-screen voting but took another hit this year when Hurricane Katrina caused the postponement of $10 million in voting machine deliveries in Gulf areas.

The company said in September that rising fuel costs and a slow performance in its North American bank security business forced it to slash third-quarter earnings expectations to between 32 and 37 cents a share, including the one-time charges. At the time, analysts surveyed by Thomson Financial projected third-quarter earnings of 66 cents a share.

In October, Diebold said ineffective supply chain management, higher-than-expected manufacturing and production costs and higher energy costs also contributed to the third-quarter performance.