Riding a wave of profits coming from banks' continuing, love affair with the cash machine, Diebold Inc. is taking some of that largess. to establish beachheads in other spheres of electronic commerce.

Wall Street has been pleasantly surprised by the recent performance of Canton, Ohio-based Diebold, as its sales of automated teller machines continue to grow at a healthy clip. Correspondingly, its stock price rose a whopping 50% in 1993, and so far this year it shares are up over 12%.

Diebold's stock ascent has been linked to a rise in its earnings driven mainly by ATM sales. The company reported-last month that its six-month revenues for 1994 reached\$365 million, up 28% from the year-earlier period. Profits for the first half of 1994 reached $29 million, or 95 cents a share, up from $20 million, or 68 cents a share in the same period in 1993.

"We've had a strong six months in terms of revenues and profits," said Robert W. Mahoney, Diebold's chairman and chief executive officer, noting that 80% of his company's sales comes from financial institutions.

That reliance on banking once worried Wall Street, which predicted that ATM sales would flatten out as banks merged and closed branches.

But those two trends have actually helped Diebold sell more cash machines.

Many banks, with fewer bricks-and-mortar offices to attract customers, have been aggressively installing ATMs in non-branch locations like shopping malls, airports, and office buildings.

Another surprising development was that when the merger wave hit banks over the past few years, it helped ATM manufacturers such as Diebold and AT&T Global Information Solutions Corp. For example, after BankAmerica Corp. merged with Security Pacific Corp. in 1992, it spent over $30 million to replace Security Pacific's fleet of 1,500 aging cash machines with new equipment from Interbold, a joint venture owned Diebold and International Business Machines Corp. Diebold holds a 70% stake in Interbold, formed in 1990 when IBM stopped manufacturing its own line of ATMs.

Another big deal for Diebold came last year Electronic Data Systems Corp. agreed to purchase 4,000 Interbold ATMs that are being installing in 7-Eleven convenience stores across the United States.

Wall Street is still somewhat skeptical that the ATM boom will accelerate this year as it did in the last two years.

In a recent report on Diebold, Barry Bosak, an analyst at Smith Barney, noted that ATM sales in the United States "will probably not equal the 49% unit growth rate of 1993, but still should be very robust."

Mr. Bosak said he rates Diebold's stock as "neutral, medium risk" at its current price of around $45 a share.

But Mr. Mahoney is quick to point out that his company has already been planning for the eventual slowdown in domestic ATM sales by investing to expand its business overseas.

Its biggest move came late last year, when Diebold formed a joint venture in Shanghai to manufacture ATMs in China. Smith Barney's Mr. Bosak estimates that if China follows the U.S. model of one ATM for every 4,000 people, the world's most populous country will eventually need a quarter of a million cash machines.

Diebold executives predict that the China venture will start adding significantly to its revenue base in 1996.

Diebold is also investing to establish footholds in emerging markets like health care automation and electronic benefits transfer. As part of that effort, Diebold is adding 52,000 square feet to its headquarters to expand it research and development activities.

"Beyond banking, when you look at the vertical markets we in, I'm very excited about the health-care situation," Mr. Mahoney said, but he quick to add that he accepts the show-me attitude of investors.

"Wall Street is not going to react until they see results of our strategies."

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