International Game Technology released earnings for the 2nd quarter of 2009 and revealed that profits fell thirty-nine percent. Overall revenues decreased by 23 percent and the total number of slot machines shipped to casinos fell 31 percent. Investors and gambling analysts didn’t seem deterred by the news though. In fact, shares rose more than 14 percent soon after the company earnings were revealed.
IGT reported net income for the second quarter of $66.3 million, or 22 cents a share. Last year’s earnings for the same time period were reported to be $108.3 million, or 35 cents a share. Revenues for the quarter were $522.1 million, compared to $677.4 million for the second quarter of 2008.
When speaking to investors, Susquehanna gaming analyst Robert LaFleur said, “Overall, results were above our expectations on product sales. Product sales revenue declined … but was still well above our pretty low expectations for the quarter.”
MorganJoseph gaming analyst Justin Sebastiano assuaged some investors’ fears by telling them about IGT’s contract for 1700 slot machines for a new casino in Michigan. In addition, improvements were made in other company areas. Steven Kent, a gaming analyst for Goldman Sachs told investors, “The company’s cost savings are showing an immediate impact, and product sales strength is especially notable given replacement sales have been an Achilles heel for IGT and the sector.”
Over the last 8 months, International Game Technology has cut more than $100 million from their costs. Though job cuts were part of the cost-cutting strategy, only about one-third of the 161 projected layoffs have been made thus far.
Joe Greff, a JPMorgan gaming analyst, felt investors would be relatively pleased with the earnings reports, “given recently reduced expectations that this was going to be a ho-hum quarter.”
And CEO Hart reported that IGT shipped 2300 replacement slot machines just between April and June of this year – a 28 percent increase over the 1st quarter of 2009. Hart believes the reason for this increased is that casino operators are starting to realize older slot machines need to replaced. And Bill Lerner, a Union Gaming Group principal, said IGT’s reports “suggest stability in the gaming equipment sector.”
