The Associated Press, October 12, 2004
NORTH CANTON, Ohio - Mounting legal costs over its electronic voting equipment have forced automated teller machine maker Diebold Inc. to slash its third-quarter earnings forecast.
Diebold said in a news release Monday that its legal woes in California would reduce profit by 5 cents a share.
Executives expect the company to earn about 67 cents a share, down from its earlier forecast of 70 cents to 74 cents. The company said it also expects lower fourth-quarter and full-year earnings.
In September, California Attorney General Bill Lockyer joined a lawsuit alleging that Diebold sold the state shoddy hardware and software, exposing elections to hackers and software bugs. The case was originally filed late last year by a computer programmer and a voting rights advocate, who claimed that California elections officials spent at least $19 million on equipment that had critical hardware and software problems.
California's Alameda County also joined the false claims case, which could require Diebold to pay triple damages. Faulty equipment in the March primary forced at least 6,000 of 316,000 voters in the county east of San Francisco to use backup paper ballots instead of the paperless voting terminals.
Earlier this month, a federal judge in San Jose, Calif., ruled that Diebold knowingly misrepresented its claims when it sent threatening letters to Internet providers who posted the company's internal documents online.
The ruling by U.S. District Judge Jeremy Fogel was a symbolic defeat for Diebold and a major victory for electronic voting critics and free speech advocates, who sued Diebold for more than $5 million in damages and attorneys' fees. Fogel will determine the amount of damages to be awarded at a later time.