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Strategies & Market Trends : Voting Machine Companies

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To: NotNeiderhoffer who wrote (30)11/19/2000 7:07:05 PM
From: levy  Read Replies (1) of 69
 
Presidential Race Brings Attention
To the Business of Voting Machines

By CHAD TERHUNE and JONI JAMES
Staff Reporters of THE WALL STREET JOURNAL

Get ready for another post-election scramble -- this time by officials searching for more accurate vote counts and voting-machine vendors looking for new business.

Around the country, local election officials are talking about scrapping old systems and switching to new, more accurate ways of tallying the vote. In Georgia this week, Fulton County's elections chief announced that she was trading in punch-card ballots -- similar to those used in the dispute over presidential voting in Palm Beach, Fla. -- for an optical-scan system.

Though local governments are notoriously pinched for money, help might be on the way. This week, Sen. Charles Schumer, a New York Democrat, proposed legislation that would call for the Federal Elections Commission to establish guidelines for modernizing elections and make $250 million available to state and local governments to buy new equipment. Lawmakers in individual states also have talked about providing more money to municipalities.
See a table illustrating the different types of voting machines

Punch-card voting, however, isn't likely to get their support. Even though it was the most widely used voting method in 1998, it already was seen as a shrinking business. Larger companies have focused more on selling optical-scan systems over the past decade and left the punch-card business to smaller competitors.

Optical-scan systems, which require voters to fill in an oval or connect an arrow with a pen, have replaced many punch-card systems, although primarily in smaller jurisdictions. The other fast-growing alternative is electronic-voting machines, which automatically record a voter's selection from the touch of a button. Electronic units usually resemble an automatic-teller machine or employ a touch screen.

Jim Ries Jr., president of MicroVote Corp., Indianapolis, says his electronic-voting machines cost about $4,000. The overall system cost can be double that of an optical-scan system because multiple machines are needed in every precinct. Mr. Ries tells municipalities they can usually recoup that difference within five to 10 years and eventually save money through lower ballot-printing costs.

Internet voting or voting by mail are possibilities but appear doubtful for widespread use in the near term.

Some elections officials aren't confident that optical scans are any better than using punch cards. Both allow overvoting, or voting for two candidates in the same race, which can cancel out the vote.

And optical-scan systems have run into high-profile problems. In Hawaii two years ago, Election Systems & Software Inc., Omaha, Neb., had to pay for a statewide recount in the governor's race because six optical-scanning machines failed to read ballots. The company says it was one of the first elections for a new model and the problem was fixed.

In Georgia, Secretary of State Cathy Cox is pushing for a uniform electronic-voting system. Her office began contacting voting-machine vendors last week to develop a budget request for next year. She envisions a pilot project by 2002 in about 25 counties and possibly a statewide rollout in time for the next presidential election.

"We feel this type of electronic equipment is superior to all other systems out there," says Ms. Cox, adding, "No doubt it will be a multimillion-dollar expense to switch over. But do people want to bite the bullet to have an accurate system?"

Industry officials agree that both punch cards and optical-scanning offer about the same degree of accuracy. "Our margin of error is far less than 1%," says Todd Urosevich, vice president of customer services at Election Systems & Software, one of the big three voting-machine vendors.

Bill Kimberling, deputy director of the FEC's election administration office, warns that better, smarter technology may never eliminate one of the top variables in an election count's execution: human error. Despite all the talk of "hanging chads," in the Florida vote, key errors in Volusia and Palm Beach counties -- that resulted in more than 900 ballots being overlooked in the first returns -- were the result of an elections worker improperly operating a vote-counting machine.

"The day we get voting equipment that operates perfectly and without error is the same day we get a car that never gets into an accident," says Mr. Kimberling.

Industry players who could benefit:

* Election Systems & Software. The company was formed from the 1997 merger of American Information Systems Inc., Omaha, Neb., and Business Records Corp., Dallas. ES&S works with about 2,000 counties and sells both optical scanning and electronic systems.

* Global Election Systems Inc., a Vancouver, British Columbia, company traded on the Toronto Stock Exchange. The company's stock hit a 52-week high of C$2.65 (US$1.71) on Monday on optimism that the presidential recount will lead to more business.

* Sequoia Pacific Voting Equipment Inc., Jamestown, N.Y., a subsidiary of Jefferson Smurfit Group PLC, a paper-products company based in Ireland. Riverside County in California had the first large countywide election using electronic touchscreen voting last week -- a $14 million system purchased from Sequoia.

Losing out may be smaller companies invested in punch cards. Paul Nolte, president of Election Resources Corp., Little Rock, Ark., an eight-employee company which primarily sells punch-card systems -- including the one used in Palm Beach County -- says he will focus now on developing an Intranet voting system that avoids security problems related to the Internet.

"I expect this current situation will cost us a number of good-sized counties in the next two years," he says.

Write to Chad Terhune at chad.terhune@wsj.com and Joni James at joni.james@wsj.com
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