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IGT Gains

Posted on April 24th, 2010

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The gaming industry is a sunshine industry that crosses boundaries and nationalities across the world. Granted that there may be countries which are bigger than the rest, it cannot be denied that casinos continue to lure many individuals. More often than not, individuals with no credit cards are restricted aside from the usual regulation on rules and in some cases, nationality and legislation, the sector is open to a good number of players, affiliates, vendors and operators. One can only expect things to continue growing for most of the casinos that have gained success in capturing a good market over time. The same could be said for companies such as International Game Technology, a vendor of slot machines and gaming devices for many casinos.

Profits Up

Given the economic recession, unemployment rates and news regarding the situation of the world economy, casinos continue to report profits earned for the second quarter such as International Game Technology. This company is known for specializing in system products and gaming machines. IGT designs, develops, manufactures, distributes and sells these products to many online casinos which include slot devices, electronic games and management systems, among other things.

They are headquartered in Reno, Nevada and it has reported that their income has increased by seven percent during the first quarter of this year and quarterly revenues jumped to about five percent. Roughly translated in monetary figures, that is an income of almost $40 million and $0.12/share. During the same quarter for the previous year, this company reported an income of $33.6 million or $0.11/share.

The company had been affected by a write down for obsolete equipment for the amount of $1.9 million and restructuring costs amounting to $16.1 million which totaled to $18 million in charges or $0.06/share. Their Japan facility was closed down and it cost the company close to $7 million which would have shown a higher net income for IGT at $60.6 million of $0.20/share. Despite these losses, IGT has gained too for a good number of reasons.

Increase in the Company’s Revenue

Casinos which turned to new games to throw away old slot machines had helped make IGT recover from its losses. IGT shares that its revenues had increased by $22 million this year compared to the same quarter last year. About 57 percent of the revenue was from operations which it shares from revenues in slot machines with customers. The remainder of their revenue can be attributed to its product sales. IGT was able to balance this with keeping their operational costs as minimal as possible.

Competitors and experts have made comments about this announcement on IGT’s profits including Joel Simkins, a gaming analyst from Macquarie Securities. They have noted that IGT sold 200 less slot machines during the first quarter of this year compared to the same quarter last year. This observation dampened expectations toward a more robust sale of slot machines in the coming months. The investment sector has been concerned about this but view the profit announcement from IGT as net positive.

Another gaming analyst, Todd Eilers of Roth Capital Markets shares that IGT may have benefited largely from casino openings noted in Oklahoma and St. Louis which showcased a combination of 5,000 slot machines. He said that IGT is known to be a big market player in terms of large casinos opening than selling replacement machines for old ones. Many acknowledge that IGT’s Chief Executive Officer has been effective in steering the company through challenges as it continues to pave the way for product innovations and improvement of content development that continues to satisfy existing customers and bring in new ones.