IGT earnings surpass analyst expectations

Thursday, Jan. 24, 2002 | 11:12 a.m.

International Game Technology of Reno, the No. 1 slot machine manufacturer, today reported higher earnings for the first quarter of its fiscal year, surpassing analyst expectations.

IGT reported earnings of $51.8 million, 70 cents a share, compared with $48.2 million, 64 cents a share for the same quarter a year ago. Analysts surveyed by First Call predicted earnings would hit 65 cents a share for the quarter.

The company reported revenue of $335.4 million for the quarter ending Dec. 29 compared with $301.7 million for the same period a year ago.

Analysts were generally pleased with the results, but warned that play on the company's progressive slot machines was off, some of that attributable to the downturn following the Sept. 11 terrorist attacks.

UBS Warburg gaming analyst Robin Farley, in a report issued after earnings were announced, noted that IGT's revenue per progressive unit fell 5 percent in the quarter from $59 to $56.

"This reflects consumer play levels in the post-9/11 environment, this relatively small decline shows resilience," Farley said. "In fact, the company reports that play levels from progressives have rebounded everywhere except for the slight decline still seen in Nevada.

"The company did not grow the total number of progressive games in the quarter, because Harrah's (Entertainment Inc.) reduced its progressive base by 500-600 units," Farley said.

"Still, that implies there was a net increase in units installed at all other properties combined. Furthermore, growth in the installed base is driven by new game introductions, and in the year ahead, we expect some strong themes like 'Harley Davidson' and 'I Love Lucy' to continue to drive the installed base. Even so, we look for the installed base to grow at only half the rate it did in 2001."

IGT said most of its business for the quarter was derived from replacement sales, which represented about 57 percent of its revenue.

The company sold 32,500 machines worldwide during the quarter compared with 30,000 for the same period last year. Domestic shipments accounted for 12,600 of those machines, compared with 15,000 the previous year.

The company attributed the downturn to the maturation of the California Indian gaming market, where 250 machines were sold, compared with 3,500 the first quarter of 2001.

There were 7,200 replacement sales for the quarter and the company expects that segment to grow as existing customers evaluate whether they want to install coinless slot machines in their casinos.

Last month, the company completed its $1.5 billion acquisition of Las Vegas-based Anchor Gaming, which was its partner in the franchise for the lucrative Wheel of Fortune slot machine.