Hi BLM! I wonder if you saw this. Diebold in trouble

[TayTay]

Your favorite electronic voting systems company is in trouble with the SEC. The 'informal' investigation that the SEC launched last year over rumors that Diebold over-stated earnings in 2004 has now escalated into a 'formal' invetigation, which means the SEC has subpeona powers on this co to 'open the books.'

This is a story from an industry publication. Check out where earnings were in trouble. (And gloat.)

Diebold Now In Official SEC Crosshairs

ATM & Debit News, Sec. Legal News, Vol. 7, Issue. 32, p 1 08-24-2006


What started as an informal look at Diebold Inc. by the U.S. Securities and Exchange Commission has become a formal inquiry, creating a financial and legal headache for the ATM manufacturer.

By changing the status of the inquiry from informal to formal, the SEC has given its staff the power to subpoena witnesses and documents in connection with their investigation, which observers now say could involve all aspects of Diebold's accounting procedures

North Canton, Ohio-based Diebold, the largest U.S. ATM vendor, first announced in May that it was the subject of an informal inquiry by the SEC relating to its revenue-recognition policy. The issue came to light on Jan. 31, 2006, when Diebold announced its results for the fourth quarter of 2005. At that time, the firm said it had just unearthed information that would oblige it to restate results for the quarter.

On March 7, Diebold restated $7 million in the fourth quarter gained from its 2005 electronic voting systems revenue. About $4.2 million in net income was taken out of the fourth-quarter income mix to be recognized in future periods. This adjustment reduced previously announced 2005 full-year earnings per share by 6 cents. Diebold said it would recognize this deferred revenue and associated net income between 2007 and 2010.

Analysts agree that the scope of the SEC inquiry now is likely to reach beyond that of revenue recognition for electronic voting machines. "Although the investigation was sparked by concerns about voting machines revenues and stock trading, the SEC will undoubtedly look at all areas of Diebold's business, including ATMs," says an industry source who declines to be identified. "Accountants know that when you find problems in one area of a firm, they are usually replicated all over the business. After all, each unit files its accounts to a central accounting operation."

Sam Ditzion of Boston, Mass.-based Tremont Capital, an advisory firm for the ATM business, agrees. "When the SEC gets subpoena power over a firm, it generally looks at all areas of its business," he says.

The wheels of justice do indeed grind slowly but they do grind exceedingly fine. Gee, I wonder why Diebold is being so closely scrutinized over voting machine revenues? (hehehehehehe! Kudos to the activists who have been on this companies back for so long. There are many ways to 'attack' a company. Tax fraud and under or over stating earnings is but one way.)

[blm]

1. Good news, Tay - will lift one to you this weekend to celebrate.

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