Voting machine maker bought

By Nicholas Yulico,   Inside Bay Area   10 March 2005

OAKLAND ? Sequoia Voting Systems, a major U.S. electronic voting machine maker, has been purchased for $16 million by the company that supplied voting machines for last year's elections in Venezuela.

The acquisition by Smartmatic Corp., based in Boca Raton, Fla., ends a three-month sale process for Oakland-based Sequoia, which will remain headquartered here and keep its name.

"We believe this is a very positive deal for Sequoia," said Tracey Graham, Sequoia's president.

Closely held Smartmatic makes a touch-screen e-voting machine with an auditable paper trail, similar to Sequoia's product.

Smartmatic's voting machines have not been certified in the U.S. but were used to record 16 million votes in Latin America   last year.

The state of Nevada used Sequoia's paper-trail systems for the 2004 primary and presidential elections. In December, California election officials approved Sequoia's systems for use in future elections.

When Sequoia was put up for sale in December by British firm De La Rue Plc, analysts predicted a tough sell.

Sequoia's technology has received high ratings from U.S. election officials, but the company has been unprofitable, like much of the e-voting industry, over the past several years.

Sequoia had sales of $74.7 million and operating losses of $3.2 million for the 12 months ending March 27, 2004, according to De La Rue.

Smartmatic seems to be getting quite the deal. De La Rue purchased   its 85 percent stake in Sequoia for $35 million in May 2002. The $16 million price tag Smartmatic got is a "ridiculously low amount of money," said Charles D. Brady, an analyst with Hibernia Southcoast Capital Inc.

Brady senses De La Rue probably just wanted to get rid of Sequoia and write off its loss from the company.

Graham said more than   30 organizations expressed interest in buying Sequoia, but she did not provide names of the bidders, citing confidentiality agreements.