Re: OVF Cited in Diebold Election Systems List of Woes

From: Greg Christopher <stork_at_electronify_dot_com>
Date: Tue Mar 06 2007 - 01:00:50 CST

They should switch back to OS/2.



On Mar 5, 2007, at 4:08 PM, charlie strauss wrote:

> Lovely machines Alan. You mean the new Windows based Diebold ATMs
> like this one:
> or these:
> Note that the Atm network got the internet worm even though the
> ATMS were theoretically NEVER connected to the internet. Best
> guess is their local net was contaminated by an infected laptop or,
> worse, their VPN had an intrusion.
> Good news is that ATM transactions are inherently depositor
> verifiable.
> -----Original Message-----
>> From: Alan Dechert <>
>> Sent: Mar 5, 2007 6:45 PM
>> To: Open Voting Consortium discussion list <ovc-
>> Subject: [OVC-discuss] OVF Cited in Diebold Election Systems List
>> of Woes
>> I went to the bank today (US Bank) and used a new Diebold ATM to
>> make a
>> deposit. I've never seen such a nice ATM. It asked me if I wanted a
>> receipt.
>> You know how the usually have a bin with envelopes for deposits,
>> and there
>> are usually empty envelopes strewn all over the place. Not here.
>> This
>> machine prompted me saying, "do you need an envelope?" I pressed
>> "yes" and
>> it handed me an envelope.
>> Worked real nice.
>> Poor old Diebold. They should stick with ATMs.
>> "Open Voting Foundation issued a report alleging that Diebold
>> touch-screen
>> functions can be changed with the flip of an internal switch.Open
>> Voting
>> Foundation issued a report alleging that Diebold touch-screen
>> functions can
>> be changed with the flip of an internal switch."
>> Mar 4, 3:29 PM EST
>> Diebold Weighs Strategy for Voting Unit
>> AP Business Writer
>> CLEVELAND (AP) -- Diebold Inc. saw great potential in the
>> modernization of
>> elections equipment. Now, analysts say, executives may be angling
>> for ways
>> to dump its e-voting subsidiary that's widely seen as tarnishing the
>> company's reputation.
>> Though Diebold Election Systems - the company's smallest business
>> segment -
>> has shown growth and profit, it's faced persistent criticism over the
>> reliability and security of its touch-screen voting machines.
>> About 150,000
>> of its touch-screen or optical scan systems were used in 34 states
>> in last
>> November's election.
>> The criticism is particularly jarring for a nearly 150-year-old
>> company
>> whose primary focus has long been safes and automated teller
>> machines.
>> "This is a company that has built relationships with banks every
>> day of
>> every year. It pains them greatly to see their brand tarnished by
>> a marginal
>> operating unit," said Gil Luria, an investment analyst who
>> monitors Diebold
>> for Wedbush Morgan Securities Inc.
>> In the calm after the November midterm elections, Tom Swidarski,
>> Diebold's
>> chief executive officer, told analysts in a conference call that
>> the company
>> plans to announce its long-term strategy for the elections unit
>> early this
>> year.
>> Swidarski declined an interview request to shed more light on the
>> voting
>> segment's future.
>> But in an annual report filed last week with the Securities and
>> Exchange
>> Commission, Diebold's discussion of its election systems business
>> pointed
>> out various ongoing concerns. Diebold acknowledged that complaints
>> about its
>> voting products and services have hurt relations with government
>> election
>> officials.
>> Diebold indicated it still is "vulnerable to these types of
>> challenges
>> because the electronic elections systems industry is emerging."
>> The report
>> also mentioned inconsistency in the way state and local
>> governments are
>> adapting to federal requirements for upgrades in voting technology.
>> Further changes in the voting laws could further hurt business,
>> the filing
>> said.
>> Diebold spokesman Mike Jacobsen said that whenever Diebold
>> evaluates one of
>> its businesses, it looks for growth, profitability and
>> characteristics that
>> make it a long-term strategic fit.
>> Jacobsen would not say when the announcement about the
>> subsidiary's future
>> may come.
>> "I imagine at this point it's a question of whether have they found a
>> private equity buyer yet or are they about to announce they are
>> going to
>> look for one," Luria said. He did not speculate on who that may be.
>> Diebold headaches have abounded.
>> Some of its voting machines have been criticized for lacking a
>> voter-verified paper trail for post-election audits. Last summer,
>> the Open
>> Voting Foundation issued a report alleging that Diebold touch-screen
>> functions can be changed with the flip of an internal switch.
>> Activists have
>> found source code online. And there have also been numerous
>> lawsuits and
>> leaked internal memos.
>> FTN Midwest Securities analyst Kartik Mehta wonders if a business
>> that has
>> been a lightning rod for criticism is worth it. He said Diebold
>> leaders need
>> to decide "if that negative publicity is hurting them in selling
>> products to
>> financial institutions, security products to government or any of
>> their
>> other customers."
>> North Canton, Ohio-based Diebold jumped into e-voting in 2002,
>> when it
>> acquired Global Election Systems. It had some prior experiences with
>> electronic voting through its Procomp business in Brazil.
>> The elections business was good for 8 percent of Diebold revenue
>> and about
>> 12 percent of profit last year, but some of that is from Diebold's
>> voting
>> and lottery contracts in Brazil.
>> By comparison, the ATM segment produced about 65 percent of the
>> company's
>> revenue and 63 percent of profit in 2006. Safes have evolved into
>> Diebold's
>> second biggest segment, now called "security solutions." It makes
>> various
>> devices and systems for business and government security. Last
>> year it gave
>> Diebold about 27 percent of its revenue and 25 percent of its profit.
>> If profit is the key measure for Diebold, the voting business
>> would seem to
>> be a good fit. But for this segment, a 2006 gross profit (before
>> taxes,
>> costs and expenses) on products and service of about $83.5 million
>> isn't the
>> whole story.
>> "I've been surprised that Diebold has stayed in the voting
>> business for this
>> long, considering the size of the company and the other sources of
>> revenue,"
>> said Avi Rubin, a computer scientist at Johns Hopkins University
>> and a
>> frequent foe of Diebold voting systems' programming. Rubin is
>> director of
>> ACCURATE, an e-voting research organization funded by the National
>> Science
>> Foundation.
>> Diebold has always defended its voting machines and its own
>> intentions, even
>> after its former chairman and chief executive, Wally O'Dell,
>> sought with
>> little success to convince critics his strong ties with Republican
>> politics
>> as a fundraiser for George W. Bush were not the motive for the
>> company's
>> involvement in elections.
>> O'Dell resigned in 2005 and was replaced by Swidarski, who had
>> been the
>> company's president and chief operating officer. His main focus
>> has been on
>> expanding international business for ATMs, a less public business.
>> Critics remained. About the time of the November elections, HBO
>> aired a
>> scathing documentary entitled "Hacking Democracy" that again raised
>> questions about the security of Diebold machines.
>> Might Diebold choose to keep the voting business and grow it?
>> "It's a possibility, but I'd assign it a very low probability,"
>> Luria said.
>> Voting machine makers such as Diebold; Election Systems &
>> Software, of
>> Omaha, Neb.; Sequoia Voting Systems, of Oakland, Calif., and Hart
>> InterCivic, of Austin, Texas have had the federal Help America
>> Vote Act of
>> 2002 as a sales catalyst. HAVA, with $3.9 billion of funding,
>> urged the
>> nation to move past punch card voting and hanging chads that
>> delayed the
>> conclusion of the 2000 presidential election.
>> ES&S, Sequoia and Hart InterCivic declined comment on a possible
>> Diebold
>> Election Systems sale.
>> Douglas E. Rodgers, managing partner and chief executive officer of
>> Washington-based investment banking firm FOCUS Enterprises Inc.,
>> said he has
>> worked with Diebold executives on recent acquisitions. He could
>> not comment
>> on Diebold's intentions for voting systems.
>> Kimball Brace, who closely tracks voting system vendors as
>> president of
>> Washington-based Election Data Services Inc., said there is
>> uncertainty now
>> in the elections market, a result of possible legislation setting new
>> requirements with no promise there will be additional funding.
>> He couldn't say what Diebold will do.
>> "If I were in these guy's shoes, I'd be looking close and hard at
>> what I'm
>> doing in this marketplace," Brace said. "But given the
>> uncertainty, who
>> would buy it?"
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Received on Sat Mar 31 23:17:04 2007

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