Friday, July 31, 2009 | 3:53 p.m.
- IGT reports 38.7 percent loss during third quarter (7-23-2009)
- IGT lays off workers as Bally expands (7-10-2009)
- IGT lays off managers to cut costs (6-17-2009)
- IGT president resigns, board member to take over (3-25-2009)
- IGT reports quarterly loss (1-22-2009)
- IGT names executive (12-30-2008)
- International Game Technology exec to step down (12-10-2008)
A law firm specializing in class-actions has filed a lawsuit against International Game Technology over the decline of IGT's stock price in 2008.
Coughlin Stoia Geller Rudman & Robbins LLP, which has offices around the country, filed the lawsuit in U.S. District Court for Nevada on Thursday seeking class-action status on behalf of purchasers of IGT stock between Nov. 1, 2007, and Oct. 30, 2008. The lead plaintiff is the International Brotherhood of Electrical Workers Local 697 Pension Fund.
Named in the suit as defendants are IGT; TJ Matthews, who in March stepped down as president and chief executive but remained as chairman; Patrick Cavanaugh, executive vice president and chief financial officer; and Daniel Siciliano. The suit says that during the period at issue, Siciliano served as interim principal financial officer, chief accounting officer and treasurer.
The defendants are accused of making false and misleading statements about the company's financial prospects. The Electrical Workers claim to have been harmed as IGT stock moved from about $45 in November 2007 to about $49 in March 2008, tumbling to less than $8 in November 2008 as sales prospects dimmed due to the recession hitting the gaming industry.
The stock of the Reno-based company now trades at about $19.75.
IGT has not yet responded to the allegations and its policy is to not comment on lawsuits, spokesman Ed Rogich said Friday.
The lawsuit claims investors were presented with a positive financial picture of IGT on Nov. 1, 2007, when the company issued a press release announcing strong results for its fourth fiscal quarter and year ended Sept. 30 including record annual revenue of $2.6 billion, up 4 percent; and gross profit up 8 percent from the prior year.
"Following the issuance of the press release, defendants Matthews, Cavanaugh and Siciliano conducted an earnings conference call with analysts and investors during which they repeated the company’s financial results and expounded on its prospects, emphasizing the company’s efforts to capitalize on its software business and eventually migrate to a server-based ("SB") gaming platform,'' the lawsuit charges.
The complaint alleges the defendants misrepresented or failed to disclose IGT had diverted substantial funds to the development of the company’s server-based (SB) and AVP (Advanced Video Platform) gaming platforms, which the plaintiff says "materially compromised the company’s growth prospects and undermined defendants’ optimistic statements.''
The suit claims the slot machine and gaming technology company was unable to develop and market its SB and AVP gaming platforms within the time frame the defendants had represented to investors due to increasingly challenging market conditions and mounting costs.
IGT's positive representations concerning the company’s shift to non-machine based operations were undermined by the slowdown in the gaming industry, "the impact of which defendants minimized,'' the law firm charges.
"Defendants concealed that ... it was not likely that IGT would achieve or exceed its earnings guidance,'' the suit complained.
"Plaintiff and the class have suffered damages in that, in reliance on the integrity of the market, they paid artificially inflated prices for IGT common stock. Plaintiff and the class would not have purchased IGT common stock at the prices they paid, or at all, if they had been aware that the market prices had been artificially and falsely inflated by defendants’ misleading statements,'' the suit charges.
The lawsuit also complains that during the time frame at issue, company insiders sold shares of their personal IGT stock for nearly $29 million -- at the same time as the investing public was buying the stock on the company's growth story.