The smartest thing Diebold's done in a while
Things have been fairly quiet on the Diebold front since they turned down UTX's bid to buy them and finally got some long-awaited earnings numbers out. Lately, they've been pumping up the fact that they're 150 years old and are ringing the NYSE opening bell. Whoopety-do! (Sorry, I'm sure that's a big deal.) But, the news today that they're selling their elections division to their rivals ES&S is a great move for their security division and the company as a whole. Whether it made money or not, whether their technology was good or not, that thing was an albatross that created nothing but headaches and bad press (check this story out, if you don't believe me, and that's Information Week, not some rogue blog (not that all blogs are rogues)). Now the company is a pure-play security company (ATMs can be called security, in a way) and can focus on that mission exclusively. It comes with a price-tag, though:
Diebold has agreed to sell its elections systems business for $5 million in cash plus future cash payments representing 70% of any cash collected on the outstanding U.S. election systems business accounts receivable as of August 31, 2009. As a result of this transaction, Diebold expects to recognize a pre-tax loss in the range of $45 million to $55 million. The pre-tax loss includes the assets and liabilities of the business, certain retained legal liabilities, and other transaction costs. This business will be reported as a discontinued operation. Excluding the impact of this divestiture, Diebold's full-year earnings per share outlook for 2009 remains unchanged.Ouch. They must have really wanted to get rid of that, huh?
In 2008, Premier generated $88.2 million in revenue, or 2.8 percent of Diebold's total reported revenue for the year.They sold $88 million in revenue for $5 million? Double ouch. Still, good to have it off their chests.