Stock rated ‘underperform’

Tuesday, June 11, 2002 | 11:01 a.m.

Investment banking firm Wells Fargo Securities LLC has initiated coverage of gambling equipment maker WMS Industries Inc. of Chicago with an "underperform" rating.

WMS' subsidiary WMS Gaming has obtained some of the most coveted licenses to well-known themes for its slot machines and has streamlined its operations in a new plant in Illinois, gaming analyst David Barteld said.

Still, company earnings should be hurt over the next few quarters due to software problems with the company's game operating platform that have resulting in state regulators in certain jurisdictions not approving new WMS games.

"(W)e do not expect WMS to have a new, next-generation operating platform for normalized game distribution until 2004," Barteld said. "We are concerned that, in the interim, WMS is at risk of losing floor space and subsequently, market share, in an extremely competitive casino game market."

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