Diebold Inc. is looking to cut out its competitors at banks where it provides automated teller machine services.
As one example, the North Canton, Ohio, company spotlighted a recent contract with Toronto-Dominion Bank, which chose to expand the services Diebold offers for its ATM fleet.
There "is an opportunity now in this contract that makes it easy to replace someone else," said Thomas W. Swidarski, Diebold's president and chief executive, on a fourth-quarter earnings call with investors.
TD is contracting with Diebold for a suite of services, including its OpteView Resolve as a method to remotely manage TD's 4,400 ATMs. The Diebold software predicts when a machine will need maintenance and guards against computer viruses.
Deals such as the TD contract could improve Diebold's earnings.
"It is easy to replace someone else now because you are in there for five years," said Swidarski of the TD deal. "We are in the back-end system using the OpteView Resolve tools, managing the entire network and the performance of their network."
Diebold's relationship with TD began in 2004 when the bank moved several services over to Hewlett-Packard Co., which used Diebold as a subcontractor.
"It's different when a big bank says I'm going to outsource my ATM operations to you, the ATM manufacturer," says Wedbush analyst Gil B. Luria of the TD agreement. "Diebold has not been a full-fledged outsourcer until this deal."
Deadlines related to updates in the American with Disabilities Act could continue to aid ATM sales up until the spring, Swidarski added.
"We anticipate strong order entry to continue at least through midyear as many financial institutions will be working to meet compliance standards throughout the remainder of the year," Swidarski said.
Diebold's revenue rose 7.4% to $850 million in the fourth quarter from the same period a year earlier. Its net income, excluding losses attributable to a noncontrolling interest, was $79.8 million, up from a loss a year earlier of $120 million. The loss in the fourth quarter of 2010 was due to a non-cash goodwill impairment of $169 million in Diebold's Europe, Middle East and Africa business.