Cash is king at Diebold. The company is one of the leading producers of automated teller machines (ATMs). In addition, Diebold offers remote teller systems, cash dispensers, and check cashing machines. Originally a manufacturer of safes, the company is still active in its original market, offering products that include vaults and security systems for financial institutions. It also provides electronic voting machines in Brazil through its Procomp Indústria Eletrónica subsidiary. Diebold's services range from product maintenance to installation consulting and plan design. Diebold, which has operations in about 90 countries, gets less than half of its sales in the US. Its Asia/Pacific presence lacks Japan and Korea.
The company's largest product segment, financial self-service (FSS), accounts for about three-quarters of its revenues, and increased by about 5% in 2011. That result was driven by a 14% gain in North America as regional banks worked to meet regulatory requirements and deploy deposit automation capabilities. International FSS operations suffered a net decrease despite Asia/Pacific climbing nearly 14%. Latin America was the biggest miss, dropping 10% compared to 2010.
Diebold's security segment fell 4% overall in 2011. Both North America and international lost business in this segment, the former falling 4%, international dipping 3%. Here, Latin America improved, while Asia/Pacific fell off, mostly in Australia. The company's smallest segment, Brazil-based lottery and election systems (less than 5% of sales), also came up short, by 37%. Election sales fell victim to cyclical factors, and lottery sales also declined.
Diebold's growth strategy is focused largely on providing software-oriented services; the company now generates more than half of its revenues from services supporting its product lines. In addition to traditional maintenance services, Diebold offers outsourced and managed services, such as remote monitoring, transaction processing, and currency management.
In 2007 the company created an integrated services outsourcing unit, which grew from a $5 million business at its inception to $150 million in 2010. In 2011 the unit exploded, securing nearly $600 million in multiyear contracts, which included an expanded relationship with TD Bank, a leading North American financial institution. That deal entails business processing outsourcing services, including management and monitoring for a network of more than 4,400 ATMs in North America. A major component of those services will be the deployment of the Symantec-developed ATM Endpoint Protection software.
Diebold continued to expand its expertise in financial security beyond North America in 2012. That year the company acquired GAS Tecnologia, an Internet banking, mobile banking, and online payment security company based in Brazil. GAS secures nearly 70% of the Internet banking transactions in Brazil by serving many of the country's major financial institutions. The purchase complements Diebold's existing operations in Brazil, which serve the financial, commerce, industry, government, and health care segments. Also that year the company acquired Altus, a Turkish provider of IT services to the financial industry.
Among its efforts at expanding into new sectors, Diebold formed an advisory board in 2011 to help form strategy and provide expertise in expanding its services for the health care industry. On the product development side that year, it worked with VMWare to create a prototype of a virtualized ATM. Like traditional virtual computers, the ATMs will get their computing resources from a central server shared by the other virtual ATMs. The system would provide multiple benefits, resulting in reduced costs, improved efficiency, and greater ATM uptime. Diebold is also working on biometrics and near-field communications technology targeting elevated security and convenience.
The company has been taking steps to become more efficient in its manufacturing, procurement and logistics, and product development, as part of a multiyear program aimed at reducing its costs. Its efforts have included consolidation of its manufacturing and distribution operations in the EMEA (Europe, Middle East, and Africa) region, as well as job cuts. – less