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Diebold down 5%, but how’d security do?

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Thursday, July 29, 2010

Diebold put out their 2Q results yesterday and it’s yet another sign that the boomtimes aren’t exactly back: Total revenues are down 5 percent YTD, though down just 4 percent comparing 2Q 2010 to 2Q 2009.

Still, it’d be nice to see some sign of a turnaround, right? (North American revenues are actually down 14 percent YTD!)

The one good thing they can point to is the security segment: “Security orders increased 7% overall driven by year over year increases in non-financial markets.”

But they haven’t exactly banked that revenue yet. Overall, security product sales are down 15 percent, quarter to quarter, and 13 percent YTD. This is mitigated, though, by pretty good performance with security services, which are actually up 5 percent for the quarter and are basically flat for the year.

This would seem to validate, too, Diebold’s focus on the central station in security, and their service-based approach (and the emphasis on services that all the talking heads are putting lately). Services were just under 63 percent of revenues for security last year, and are now 66 percent of revenues for the first six months of 2010.

The same trend is happening in their financial services biz. Product sales are down 19 percent, but services are actually up 1 percent.

Maybe this is what allowed them to up their GAAP operating profit up slightly quarter to quarter?

That’s how CEO Tom Swidarski sees it, anyway:

Swidarski continued, “I was particularly encouraged by the sustained improvement in profitability in our service business. I am also encouraged by the increased stability in our security business, as our new market segments are beginning to generate overall growth in orders. Increased success in areas such as enterprise security is critical in our efforts to return this business to growth moving forward.”

However, he’s still saying things don’t look that great out there, talking about a “challenging” market environment. Of course, people who lose ground are likely to talk about it being challenging whether it is or it isn’t. But let’s not forget that Diebold still threw up operating profits of $87 million, so it’s not a disaster over there or anything.