Diebold unveils preliminary revenue numbers

Sunday, June 1, 2008

CANTON, Ohio--Diebold this week released preliminary revenue numbers that have been long-awaited by some industry watchers, the more so considering United Technology’s recent hostile bid to buy the company.

Diebold estimated it took in $700.2 million in the first quarter of 2008, up roughly eight percent over 1Q 2007. Its security division posted estimated first quarter 2008 revenue of $186 million, up three percent from $181 in the first quarter of 2007.

Thomas Swidarski, president and chief executive officer of the company, said in a prepared statement he is “encouraged by the positive start to the year in the company’s overall performance during the first quarter.”

“In North America, combined financial self-service and security revenue was slightly better than anticipated, with moderate growth in the large national banks,” he continued. “In the regional bank space, we have seen increased success from our integrated services offerings, which are gaining momentum and helping to offset some of the expected weakness in self-service revenue in this segment. The growth on the financial segment of our security business, especially considering its heavy exposure to the U.S. market, is very encouraging.”

The company has not released its financial results in some time because federal regulators are reviewing the way it reports revenue. Diebold said it plans to restate some financials when it completes the review, which the firm noted Wednesday should be completed by the end of the second quarter.

UTC in February made an official proposal to acquire Diebold for $40 per share in cash, representing a total enterprise value of approximately $3 billion. Officials at Diebold rebuffed the offer saying it undervalued the company and the offer was “opportunistic,” but at the time the proposal represented a premium of approximately 66 percent to Diebold’s closing stock price on Feb. 29. In March, UTC revealed that it owns a 3.5 percent stake in the company.

Extrapolating the estimated 1Q numbers for 2008, the UTC offer would now represent more than 1x annual Diebold revenues.

If UTC is successful in its bid for Diebold, the two companies could create a powerhouse in the security integration market as Diebold’s integration arm has substantial presence in the retail and financial verticals and UTC owns Red Hawk, a security integrator that has a large presence in the banking space.

There was no mention of UTC’s offer in Wednesday’s Diebold press release other than to refer to “the obvious distractions” the company has confronted this year.

John Moran, a press representative for UTC, confirmed that UTC still stands by its offer to purchase Diebold.