The Green company reported it lost $5.9 million, or 9 cents a share, on revenue of $628.4 million for the Q1 ending March 31. The loss was primarily due to restructuring charges of $21.4 million related to a factory closing in France that reduced earnings by 32 cents a share. If the plant closing charges were excluded, Diebold said it would have earned 23 cents a share. Diebold reported net income of $12.7 million, or 18 cents a share, for the Q1 of 2006. Shares of Diebold fell $1.04, or 2.1%, to $48.96 by the close of trading at the New York Stock Exchange. Shares are up 5.6% since January 1, including reinvested dividends, and are up 19.2% from a year ago. Overall revenue for the Q1 of 2007 was up 0.8% from the same period a year ago. „I am pleased with the steady progress we made during the first quarter, as we expected the first half of this year to be challenging,” Thomas Swidarski, president and CEO, said in a prepared statement.

Software is a key growth area for the company, Swidarski told analysts Wednesday. He said Diebold expects to make „strategic announcements” in the coming weeks. As Diebold closed its factory in Cassis, France, where it made ATMs, it increased production at a new plant in Budapest, Hungary, where it expects to make 10,000 of its Opteva ATMs this year. Diebold said it also continues to evaluate Diebold Election Systems, its Texas-based electronic voting business. Election systems revenue fell by $22.6 million for the quarter. The company’s touch-screen voting machines have been criticized as being potentially vulnerable to tampering. Diebold has defended its election machines, calling the criticism invalid and unfair. Diebold said it needs more time to decide what it will do with Diebold Election Systems, which it expects will take in between $185 million to $215 million this year. Diebold in 2002 bought Global Election Systems and subsequently renamed the business. „We are working diligently on this effort, and we will communicate our strategy as soon as possible,” Swidarski said. „We will do our best to ensure than any course of action we take will be in the best possible interest of all our customers, employees and shareholders.”

Analysts and others have suggested that Diebold may spin off its election systems division. „We believe a separation via sale or spinoff could unlock some value for shareholders while also relieving the company of the negative publicity that this business has periodically generated,” Cathay Financial analyst Steven McSorley told Bloomberg News. „What they are really saying is that they want to find someone they can sell it to at the right price,” Gil Luria, a Wedbush Morgan Securities analyst, told Bloomberg News. „That also means that if they can’t do that, they are going to announce they are going to hang onto it.” Election systems revenue of $7.9 million for the Q1 of 2007 was down 74.2% from the $30.4 million in revenue reported for the same period in 2006. Company executives told analysts they expect elections business revenue to pick up in the H2 of the year. The company also said its Brazilian lottery systems business revenue dropped $18.6 million compared to a year ago. The company said it expects revenue growth for the year to be between 3% and 5%. It expects to earn between $2.15 to $2.25 a share for the year. (ohio.com)