Slot Machine Maker Beats Analysts’ Earnings Forecast

Online gaming technologies – specifically sales from the online software division, WagerWorks (www.wagerworks.com), an online gaming casino software supplier, offering regulatory compliant online gaming solutions,  helped IGT beat the odds.

"IGT delivered another quarter of solid results, with record revenues in our gaming operations business and improved product sales revenues despite flat machine shipments," said T.J. Matthews, chairman and chief executive officer of IGT.  "The ability to post meaningful financial improvements in a market with limited new or expansion opportunities is a testament to the diversity and depth of IGT\'s business and product offerings."

For the third quarter, the financial highlights were as follows:

• Total revenues were $612.4 million, up 6 percent, and gross profit were up 8 percent;

• Product sales revenues were $297.6 million, up 8 percent;

• Gaming operations revenues were $314.8 million, up 3 percent, and related gross profit up 12 percent;

• International operating income up 10 percent;

• Fully diluted earnings per share of $0.33, up 3 percent.

Analysts had expected a profit of 31 cents a share. "It\'s a lay-up from here," said Aimee Marcel, an analyst at Jefferies & Co., based in St. Paul, Minn.

Shares of the company were up $1.26, or 3.4 percent, at $37.95 in midday trading on the New York Stock Exchange (NYSE).

Lower Taxes

One factor also helping earnings -- lower-than-expected taxes and lower research and development costs, according to a research note by UBS Investment Bank.
 
During a conference call with reporters today, Matthews, the CEO, said the company continues to expect a quarterly profit of 30 cents to 35 cents a share through fiscal 2007, which ends in September.

The outlook is, moreover, conservative, he said, as it does not include sales to new markets, like Pennsylvania, which just passed a law for casinos to operate up to 61,000 slot machines.

Matthews said earnings in some future quarters may exceed 35 cents a share.

"Product sales remain volatile in terms of the timing of shipments," said Matthews, “There is new demand in places like Pennsylvania and Florida, where Broward County has approved slot machines, and Japan, where regulatory changes are forcing replacement of existing machines.”
 

Latin American Expansion

The company, what is more, aims to expand its international business, especially in Latin America, and even Asia, Matthews said.
 
Despite a decline in unit shipments to 23,500 from 24,100, third-quarter revenue rose 6 percent to $612.4 million.

International sales increased to $110.4 million from $91.9 million. North American sales rose to $187.2 million from $182.6 million.

The firm’s U.S. sales have slowed after an era of strong growth when many casinos switched from older coin-based slots to machines that issue paper tickets to newer machines.