Small and regional banks' reluctance to buy advanced automated teller machines drove Diebold Inc. into the red in the third quarter.
The North Canton, Ohio, ATM company reported Tuesday a $7.2 million net loss for the quarter, compared with net income of $46.5 million a year earlier. Revenue fell 25.8%, to $645.2 million.
Leslie A. Pierce, Diebold's interim chief financial officer and corporate controller, reminded analysts during a conference call that 2008's third quarter was the best in the company's history because of a large number of ATM orders from Brazil and China.
Diebold's financial self-service products unit, which includes ATMs, reported sales of $216.5 million, down 33.3%.
Thomas Swidarski, Diebold's president and chief executive, said during the call that the company faced significant headwinds in its core financial markets, including the continuing reluctance by small and regional banks to purchase envelope-free ATMs.
As ATM sales decline, Swidarski told analysts he sees a growing opportunity for integrated services. "We have placed 1,000 ATMs over the course of the year, and that opens the door to us selling more services to banks," he said.
Kate Monahan, an analyst with the market research firm Aite Group, said Diebold has shifted its strategy to focus on services. "Diebold has significantly stepped up marketing and sales efforts around integrated services offerings as a response to market conditions, and the company is likely to continue along this path through 2010," she said.