Ado over IGT chief's resume brings shrug from analysts

29 May 2012

The dust-up over International Game Technology CEO Patti Hart's resume discrepancy lasted all of a 24-hour news cycle.

The financial community's confidence in the slot machine manufacturing giant wasn't shaken.

With sales of newer slot machines to replace older games showing a bit of an upswing and international business continuing to flourish, Wall Street had little concern that Hart's resume showed she graduated from Illinois State University with a degree in marketing and economics, rather than a degree in business administration with an emphasis in marketing and economics.

Other than the financial website message board junkies, the analyst community let out a collective "who cares?"

Stifel Nicolaus Capital Markets gaming analyst Steven Wieczynski told investors recently that he was impressed with the company's direction.

"Several encouraging trends support our favorable long-term view on IGT shares," Wieczynski said.

Following a series of meetings with new company Chief Financial Officer John Vandemore, whose background had been criticized as being long on Disney theme park familiarity but lacking in gaming experience, Wieczynski told investors the new executive would help position IGT to outperform its counterparts in the manufacturing sector.

"His diverse financial background, outside of gaming, could help IGT take a fresh look at their financial analysis platform, which has been recently criticized by some investors," Wieczynski said.

Much could have been lost following revelations earlier this month that Hart's resume was in error.

Hart, 54, had been an outside director at Internet giant Yahoo. But she ceded her seat on that company's board after her academic credentials and board performance were questioned by Third Point Capital LLC, a hedge fund with a major stake in Yahoo that was seeking representation on the company's board.

Hart headed the search committee that selected new Yahoo CEO Scott Thompson. However, Third Point discovered Thompson did not earn a computer science degree, as was listed on his resume. He resigned as CEO on May 13.

Third Point criticized Hart for overseeing the selection process, including the $15,000 she was paid for her work.

Just as the Yahoo issue was imploding, the Las Vegas Review-Journal reported its annual list of the highest-paid CEOs in Las Vegas and Hart was No. 6 with $8.533 million in total compensation in 2011. She was the only woman of the 16 CEOs.

What saved Hart with IGT was the strong backing she received from company Chairman Philip Satre, the well-respected longtime gaming industry executive. In a statement, Satre said IGT's board found "no material inconsistencies" in Hart's academic credentials. The board also backed "the direction she has set for the company."

Those words from Satre kept the analyst community on the sidelines.

Hart has been IGT's CEO since April 2009. She has been a member of the IGT board since June 2006 and had previously served as CEO of two California-based technology companies.

Instead of focusing on Hart, Wall Street is looking at IGT's next steps. The company is still defending its $500 million purchase earlier this year of Double Down Casino, a social gaming attraction on Facebook.

However, Wieczynski said IGT officials are bullish on both the Double Down prospects and the IGT Cloud, a gaming systems network that could serve as growth impetus within that division.

The company has launched the cloud product internationally, although it could take 18 to 24 months to receive all the requisite regulatory approvals needed for full commercialization in North America.

"The long-term prospects of IGT's cloud offerings are particularly compelling, as they are designed to serve as a value-add mechanism for operators and casino patrons alike," Wieczynski said. "IGT hopes to have a full cloud product available by G2E this year. Pricing terms have still not been finalized."

While IGT's shares have declined by roughly 14 percent over the past two months, expectations remain depressed for the equipment manufacturing sector as a whole.

"We believe current levels continue to present an attractive entry point for investors seeking a value opportunity with the potential to deliver above average long-term earnings per share growth," Wieczynski said.

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