Slot maker IGT reports 44 percent drop in income

24.04.2009, International Game Technology reported Thursday that its second-quarter earnings plunged 44 percent, and company executives cut their forecast for the fiscal year, as the global economic recession takes a continuing toll on the gambling industry.

For the three-month period that ended March 31, the Reno-based maker of slot machines and casino management systems said net income fell to $38.3 million, or 13 cents per share, from $68.4 million, or 22 cents per share in the same quarter in 2008.

Revenue dropped to $475.7 million from $573.2 million.

The results fell short Wall Street analysts' forecasts. The average estimate of analysts surveyed by Thomson Reuters was for earnings of 22 cents per share on revenue of $532 million.

The company attributed about $8 million of the drop, or 2 cents per share, to restructuring related to work force reductions.

In a conference call with analysts, IGT Chief Executive Patti Hart lowered the company's fiscal-year guidance to a range of 75 cents to 85 cents per share, down from about $1.

Still, executives said they believe some sectors of the hard-hit casino industry were starting to show signs of stabilization.

"Our second quarter saw continued difficult economic conditions worldwide impacting our financial results," Hart said, "but in a number of jurisdictions we are beginning to see stability in play levels."

Hart assumed the CEO post April 1 from TJ Matthews, who resigned but remained with the company as board chairman.

IGT shares rose 35 cents, or 3 percent, to $11.53 in morning trading Thursday.

Both Hart and Matthews said a decline in consumer playing levels, as people focused on essentials instead of discretionary spending, appeared to be leveling off in some gambling markets, particularly in the Midwest.

"We think we are putting most of this behind us," Matthews said

Other areas, such as Las Vegas and Atlantic City, N.J., that are heavily dependent on tourism, continue to suffer, they said.

In November, IGT announced the layoffs of 500 employees. In January, it said another 200, mostly in its manufacturing division, would be let go by April. In March, the company also slashed its regular quarterly dividend nearly 60 percent, to 6 cents from 14.5 cents, in a moved to save about $100 million in cash annually.

Hart said IGT's goal was to position itself for a rapid recovery once the economy improves.

IGT, which in past years saw rapid growth when it introduced cashless slot and video machines, is banking on a renewed demand for widespread products with the introduction of server-based games and casino floor management technology.

The first floor-wide debut of the technology is planned at the $8.7 billion CityCenter on the Las Vegas Strip. The multi-hotel project, a joint venture between MGM Mirage Inc. ( MGM - news - people ) and Dubai World, is scheduled to begin opening later this year.

Forbes.com

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