Diebold Inc., whose stock price and financial performance have taken a battering since early last year, is showing signs of improvement.
The North Canton, Ohio-based developer of ATM machines was among the earliest of bank technology providers to be stung by banks' preoccupation with mergers and the year-2000 problem, both of which extended the sales cycles of Diebold's products and services.
On Wednesday the company reported third-quarter revenues of $312.8 million, up 9% from a year earlier. Net income was $32.6 million, up 11% and slightly better than expected.
Its stock closed Friday at $25.375, down $1.06 for the week.
"I think they are certainly improving their business," said Matthew Wolfersberger, an analyst at McDonald Investments in Cleveland. Diebold is "progressing nicely," he said, but "risks still exist," particularly with its attempt to develop an ATM distribution network in Europe.
International Business Machines Corp. had been Diebold's distributor internationally through a joint venture called Interbold. IBM pulled out of that arrangement in 1997. Since then, Diebold has been building a distribution network of its own and hiring sales and services personnel.
Mr. Wolfersberger said that because it will take time for this effort to become as productive as the previous one, he is maintaining a "hold" rating on the stock.
Diebold also announced two acquisition deals last week.
The company said it is buying Procomp Amazonia Industria Electronica SA, a Sao Paulo, Brazil-based ATM and software developer, and Nexus Software Inc., a Raleigh, N.C.-based software developer.
Terms of those deals were not disclosed.
The Procomp deal -- a cash and stock transaction that would be Diebold's largest acquisition ever -- is expected to close Oct. 31. The deal would add substantially to Diebold's share of the ATM market internationally. Procomp has 2,300 employees and had $400 million of revenues in 1998.
Procomp also makes electronic polling stations, which let 60 million people in Brazil cast their votes electronically, Mr. Wolfersberger said. Procomp has sold and installed 160,000 of these electronic polling stations.
Nexus makes software that 250 banks use to integrate branch systems, ATM networks, call centers, and Internet banking systems. It has sold its software to Wachovia Corp. and Australia and New Zealand Bank. Nexus, which was formed in 1985, had $11 million in sales last year.
The Nexus deal is part of an attempt to build a technology service business that integrates various bank delivery channels, said Michael Jacobsen, a Diebold spokesman.
Nexus' specialty is in moving legacy bank branch systems to a Windows NT technology environment, which Mr. Jacobsen said is fast becoming the standard among banks.