Bally Technologies falls despite legal progress

Associated Press

Thursday, Oct. 16, 2008 | 11:33 a.m.

Shares of Bally Technologies Inc. fell Thursday along with the broader markets even as some analysts said the likelihood of a favorable ruling in a patent dispute case should remove some overhang on the stock.

Late Wednesday, the Las Vegas-based casino equipment maker said a Nevada district court judge planned to grant summary judgment that would invalidate International Game Technology's wheel device patents.

Summary judgment means the judge was asked to rule on the case before a trial because of a lack of evidence.

Bally said the court also indicated that it would invalidate some of International Game Technology's player-tracking patents, while upholding Bally's iView interactive slot machine display does not infringe on some of International Game Technology's patents.

"These rulings should alleviate investor concerns regarding Bally's potential liability from this litigation. It should not have any near-term financial implications," Nicholas A. Danna IV of Sterne Agee & Leach Inc. said in a client note.

Justin Sebastiano, an analyst with Morgan Joseph & Co., said the developments bode well for Bally as the disputes have weighed on its stock.

Both Danna and Sebastiano maintained their "Buy" ratings on Bally.

JPMorgan's Joseph Greff said the developments may lead to a settlement between Bally and International Game Technology on outstanding claims. He also thinks the judge's decision could benefit International Game Technology, as the end of the legal disputes frees up time and "allows management to focus on internal resources, product development and right sizing its business model."

Greff reiterated Bally's "Overweight" rating and International Game Technology's "Neutral" rating.

Shares of Bally Technologies fell $1.79, or 8 percent, to $20.52 in morning trading, while International Game Technology's stock added 22 cents to $12.02. The broader markets declined following a report showing a bigger-than-expected drop in October factory activity in the Mid-Atlantic region.