Diebold Can't Sell E-Voting Subsidiary

Diebold Inc. has been unable to sell its electronic voting subsidiary, and has slashed its full-year revenue expectations for Diebold Election Systems due to controversy surrounding e-voting security, the company said Thursday.

Diebold has also established a new structure for its e-voting business, allowing it to operate more independently, the company said in a release. The e-voting business is changing its name to Premier Election Solutions, and an independent board of directors will oversee the renamed subsidiary, Diebold said.

"Rapidly evolving political uncertainties and controversies surrounding state and jurisdiction purchases of electronic voting systems" have hampered Diebold's attempts to sell its e-voting business, the company said in the release.

Diebold has been trying to sell the elections unit for more than a year, said Mike Jacobsen, a company spokesman. Diebold has not ruled out selling off all or part of the e-voting business in the future, he added.

Those same factors led Diebold to lower its full-year revenue expectations for the elections business by about US$120 million, down from previous full-year revenue guidance for the e-voting business of $185 million to $215 million.

In recent years, Diebold Elections Systems has been one of the main targets of critics who question e-voting security, and several security experts have shown vulnerabilities in e-voting systems. Researchers hired by the state of California found security problems in all e-voting systems they tested, including Diebold's, the state said in a report released in July.

Earlier this month, California Secretary of State Debra Bowen said the state would require additional security features for several e-voting systems, including Diebold's. With the new security requirements, the state recertified e-voting systems from Diebold and two other manufacturers.

The moves in California played a small part in the decision to restructure the business unit and lower revenue expectations, Jacobsen said. "This is a cumulative effect," he added. "There's a lot of activity in a lot of states."

State reviews of e-voting systems have "slowed down the big purchases" from local voting jurisdictions, he said.

In addition, competing bills in the U.S. House of Representatives and the U.S. Senate have created uncertainty among potential buyers, Diebold said.