Citing weak demand from U.S. regional banks, Diebold ( DBD - Get Report), the ATM and voting-machine manufacturer, reported a steep drop in profits and reduced its outlook for the rest of the year, prompting its shares to slide 7% Tuesday.

The North Canton, Ohio, company also said it would cut 300 jobs in an effort to deal with declining sales.

In afternoon trading, Diebold shares changed hands at $25.08, down $1.91, on more than double the average daily volume.

Before the bell, the company reported first-quarter net income of $1.6 million, or 2 cents a share, down 88% from the $13.8 million, or 21 cents a share, it earned a year ago.

Figures for the just-ended period include $25 million paid by Diebold to settle a civil lawsuit with the Securities and Exchange Commission, announced Monday. The SEC had been investigating the company over alleged accounting fraud. The settlement deal still requires SEC approval.

Without that charge and other items, Diebold said its per-share earnings came in at 39 cents for the quarter, down from 42 cents a year ago. Analysts, who normally exclude special items, were looking for EPS of 17 cents.

Diebold's top line, meanwhile, fell 4% to $663.2 million from $691.9 million.

The company blamed its results on a general recession-induced slowdown, as well as slipping demand for its automated teller machines from U.S. regional banks. Orders from Eastern Europe and Russia also fell during the quarter.

In response, Diebold said it will lay off 300 workers and make "further cuts in travel and other administrative and operating expenses." It didn't say how much it expected those moves to save.

Looking ahead, Diebold cut its full-year 2009 EPS forecast to $1.70 to $2 a share from $2.10 to $2.40. Analysts, on average, were looking for $2.17 a share.

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