Ohio shift hurts Diebold

State backs optical-scan machines over e-voting, cutting firm's revenue

By Erika D. Smith

Akron Beacon Journal   14 January 2005

Ohio's decision to ditch touch-screen voting machines will take Diebold Inc. back to the drawing board on its earnings forecast.

``We based our earnings for 2005 on the expected revenues from Ohio,'' spokesman Michael Jacobsen said Thursday. ``Now, we have to go back... We will get less revenue, but it's too early to tell how much.''

Shares of the Green company fell $1.25, or 2.2 percent, Thursday to close at $55.78 on the New York Stock Exchange.

On Wednesday, Secretary of State J. Kenneth Blackwell said Ohio's 88 counties must choose precinct-count optical-scan machines to replace their primary voting systems. Previously, the counties were able to pick either touch-screen or optical-scan machines.

``We have a tight election-reform deployment schedule, too few allocated federal and state dollars, and not one electronic voting device certified under Ohio's standards and rules,'' Blackwell said in a statement. ``Precinct-count technology just makes sense considering the flexibility it provides to financially constrained counties.''

Blackwell's decision will affect Diebold the most because it had won the lion's share of contracts to supply Ohio counties.

The company also makesoptical-scan machines, and it will get the opportunity to hawk them in the state. But Ohio will need far fewer of them in each polling place than it would have needed touch screens.

That means that even though each Diebold optical-scan machine costs about $1,000 more than each touch screen, Diebold will reap less revenue. Overall, more than $130 million is at stake in Ohio.

``We were very surprised that Ohio would choose to go down this path, especially given how the election went in Georgia,'' Jacobsen said.

The success in Georgia and other states in November using Diebold machines ended a lot of insinuations about the company, its political motives and its electronic-voting machines.

Critics had accused the company's touch screens of being vulnerable and shoddy. That led to a lawsuit in California over its AccuVote-TSX model and to demands by other states, including Ohio, that the Diebold model pass new security tests.

Jacobsen said the AccuVote-TSX has cleared every technical hurdle Ohio has thrown at it.

However, Blackwell's spokesman said the version that spits out a paper record of each vote hasn't been approved. ``They forgot about the voter-verified paper audit trail,'' Carlo LoParo said.

As it stands, the AccuVote-TSX still must pass that round of testing because a paper trail is required and at least one touch-screen machine is required in each polling place, to comply with the Americans with Disabilities Act. The total needed statewide is still a relatively small number, though.

In the meantime, Diebold and Election Systems & Software are the only companies that will sell optical-scan machines in Ohio. ES&S' Model 100 costs $5,499 per unit, while Diebold's AccuVote-OS will cost $4,572.