Diebold, partisanship and public interest elections

by David Moon // Published December 15, 2005
With the recent resignation of voting equipment vendor Diebold CEO Walden O'Dell, the company has signaled the beginning of a damage control operation. Activists and jurisdictions purchasing equipment have treated the embattled company with skepticism and oftentimes outright anger, especially after O'Dell made a promise in 2003 to help "Ohio deliver its electoral votes to the president." Additionally, the company's voting equipment suffered from several high profile machine failures in recent elections, causing many to call into question the reliability and security of these machines. Indeed all the major voting equipment vendors have had their share of troubles, and our regulatory processes are all too shadowy and poorly funded. There's an urgent need to upgrade antiquated, inflexible voting equipment, but there has to be a better way.

The U.S. Election Assistance Commission recently voted to approve 2005 voting system guidelines, and in light of all of these problems, FairVote recommended new standards that would make the voting equipment certification a transparent process open to public scrutiny. [Download the recommendations - .pdf 130 k] Since the EAC has not yet publicly released the 2005 standards, it is not yet certain whether any of our recommendations have been adopted, but we believe it is important for activists and advocates to persist in trying to create public interest voting equipment standards.

However, the fight for fair elections goes much deeper than just public interest voting equipment. As the resignation of Diebold's CEO shows, we must remove partisanship from all steps of the process. That is why FairVote has begun to monitor the powers and positions of each state's chief elections official through our Democracy SoS project, and that is why FairVote has time again called for public interest elections in the spirit of a fully protected right to vote. We support:

  • Uniform Standards and Real Accountability
  • Public Interest Voting Machines
  • Universal Voter Registration
  • Fair Provisional Ballot and Voter ID laws
  • Early Voting/Election Day as a Holiday
  • Universal Ballot Design Standards
  • Nonpartisan Election Administration
  • Voting Rights For All U.S. Citizens
  • A Constitutional Right to Vote

"Analysts praise Diebold CEO's resignation" Associated Press via Forbes

NORTH CANTON, Ohio - 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.

Diebold shares were down 74 cents, almost 2 percent, Wednesday afternoon at $39 on the New York Stock Exchange. On Tuesday, a day after O'Dell resigned, shares hit a high of $41 and closed up more than 5 percent at $39.74. Trading volume was 2.73 million shares, compared with a three-month average of 875,000 shares a day.

"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.