Wednesday, November 08, 2006

Diebold Voting Machines

Diebold DBD filed a 10-Q on Nov 6. While the company started making safe’s over 150 years ago and now has a pretty good business making ATM’s for banks, it has become very identified (almost overly) with Voting Machines. Diebold the only publicly traded company that has significant exposure in voting machines said this in their recent filing

The election systems business continues to be a challenge for the company. A number of individuals and groups have raised concerns about the reliability and security of the company's election systems products and services. The individuals and groups making these challenges oppose the use of technology in the electoral process generally and, specifically, have filed lawsuits and taken other actions to publicize what they view as flaws in the company's election management software and firmware. These efforts have adversely affected some of the company's customer relations with its election systems customers.”

Controversy abounds around voting machines. Diebold’s case is further complicated by very overt Republican Partisan support by certain senior Diebold Officers. Why would a Democrat buy Diebold? Isn’t that enough to trigger class action securities lawsuits from aggrieved investors who are shut out of key markets.

The stock is trading near its 52 week high, having a good run up since the summer. Some investors may be tempted to take some profits. Consider this: Why not sell the voting machine business to private equity. The valuation would be tricky. The electoral process clearly needs a voting machine solution, which is very big money. While Diebold has serious PR problems are they stepping away from a lucrative long-term market. If America is prepared to send young men and women to die for democracy, America should invest in adequate solutions to count votes when democracy is exercised.

Looking at it from the other way with your stock at a 52 week high and corporate liquidity is more than OK why not buy out a competitor or two. Perhaps acquire some technology that’s politically attractive to both major parties and then make some money.

Whichever way Diebold has to bust a move.