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Changing gears
Soon, Swidarski, then a senior marketing executive in the ATM unit, took over the elections business. "The board understands, as best anyone can, the volatile nature of the business/media and that politics are involved," Swidarski wrote in an e-mail to his deputies in the elections division. "However, the board cannot understand how the [Secretary of State] of [California] indicates that we have lied, misled, and withheld information."
Swidarski fired many Global staff and brought in a new boss from Canton, Dave Byrd, to run the business. The voting unit began to operate more smoothly, grossing $150 million in 2005 and making a small profit.
In December 2005, the board pushed O'Dell out and named Swidarski CEO. Just as he did with the elections business, Swidarski cleaned house: Only two of the seven top executives he inherited are still at Diebold today.
Swidarski is cut from a different cloth than his predecessor. O'Dell liked deals and was frankly bored by ATMs; he loved being known as one of Bush's Pioneers - generous Republican donors. A former senior executive with Emerson Electric, O'Dell's top priority was to make the numbers.
Swidarski, by contrast, is more focused on the customers than he is on Wall Street. (He refuses to give quarterly earnings guidance.) A former marketing executive at PNC Bank in Pittsburgh, he is straightforward and unpretentious. In his short tenure as CEO, he has changed the mood at Canton. "This place is dramatically different from a year ago," says CFO Kevin Krakora, "almost night and day."
Smart Business 100, Swidarski's $100 million plan to cut costs and increase customer service, is beginning to show dividends. Since fading to less than $35 in September 2005, Diebold's stock is now at $42. Profits dropped 41 percent last year, but were still a healthy $161 million on $2.6 billion of revenue.
Diebold looks set to beat those numbers this year. "The new management team," says Gil Luria, a research analyst at Wedbush Morgan Securities, "seems to be on top of what they really need to do to turn around the company." Krakora puts it simply, "This company prints cash."
Dubious voting
But its voting machines continue to attract scorn. In August, Edward Felten, a computer-science professor at Princeton University, got his hands on a Diebold machine similar to those still used in Georgia. With the help of two graduate students, he posted a video online that showed him infiltrating and installing a virus in what appears to be less than a minute.
Felten found that the key to the lock protecting the memory card, which is used to both update the software and record votes, was one commonly used in office furniture and even hotel minibars. Once the door to the slot was open, he could slip in a virus-infested memory card and alter votes. "We were completely floored by how easy it was," Felten says.
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