Diebold Tumbles as CEO Exits Amid Miss on EarningsBrooke Sutherland
Diebold Inc., a maker of automated teller machines, fell the most since July after saying it would hire a new chief executive officer and that 2012 earnings would miss its forecast.
Thomas Swidarski is stepping down immediately from his post and his board seat, the company said today in a statement. His departure after seven years was announced amid an “accelerated slowdown” in Diebold’s business with U.S. regional banks.
“Given the company’s ongoing performance and pace with which it is delivering tangible value, it is in our stakeholders’ best interests to make a change in leadership,” Chairman Henry D.G. Wallace said in the statement. “The company’s execution of its strategies has not been what we want or expect, and we have underperformed against the opportunities in the marketplace.”
Wallace, who replaced John Lauer earlier this week, will lead the company while directors seek a new CEO, Diebold said.
Diebold dropped 8.4 percent to $29.91 at the close in New York, the biggest slide since July 30. The North Canton, Ohio-based company’s stock has fallen 45 percent from a 2007 high of $54.25.
Earnings have faltered in the wake of the financial crisis as U.S. regional banks, the biggest customers for Diebold’s ATMs, stopped expanding, Gil Luria, a Los Angeles-based analyst at Wedbush Inc., said in a telephone interview.
Demand for the machines “really hasn’t recovered since the financial crisis,” Luria said. “Tom Swidarski did as good of a job as he could in these circumstances, but the reality is that Diebold over the last six years has had a really hard time growing earnings and I think the board of directors decided that it was time to say that the current direction didn’t work.”
Diebold’s assessment that adjusted 2012 earnings would be $2.07 a share, lower than its October forecast of $2.25 to $2.30 a share, occurred on the heels of interest by one of its largest shareholders in proposing a director.
Gamco Investors Inc., Diebold’s second-biggest holder with a 7.79 percent stake as of Jan. 10, said it would nominate Robert Prather, president of Gray Television Inc. and one of the Rye, New York-based asset management firm’s own directors, to serve on Diebold’s board.
The Jan. 10 letter is “probably the visible part of shareholder pressure,” Luria said. “The company has made very little progress in the last six years.”
Fourth-quarter earnings of 45 cents a share, excluding non-routine expenses, restructuring charges and other items, missed the average estimate of 65 cents from analysts.
In addition to the decline in its U.S. regional bank business, profit was also undercut by costs tied to Hurricane Sandy and delays in its Brazilian operations, Diebold said. The ATM maker projected 2013 earnings would be unchanged to moderately lower.