Earnings rise for International Game Technology

LAS VEGAS, Nevada -- Slot machine giant International Game Technology disregarded the lack of domestic sales opportunities in the last year and capitalized on the international market.

The result propelled the gaming equipment maker to increases in earnings and revenues for both the fourth quarter and fiscal 2007.

Both IGT Chairman and CEO TJ Matthews and gaming analysts said Thursday they believe the company is in position to benefit as gaming expands, starting with the opening of the Palazzo on the Strip in December.

IGT said it earned $122.6 million, or 38 cents a share, for the quarter ended Sept. 30, up from $114.9 million, or 33 cents a share, a year ago. The figure matched the prediction of analysts polled by Thomson Financial. For the year, IGT said its net income was $508.2 million, or $1.51 per share, compared with $473.6 million or $1.34 a share in 2006.

IGT's revenues in the quarter rose 5.8 percent to $353.3 million from $333.8 million.

For the year, company revenues were $2.6 billion, a 4 percent increase from $2.5 billion in 2006.

"Although earnings per share was in line with expectations and the quarter reflected some bright spots, the domestic unit sale market remains weak," CIBC World Markets gaming analyst David Katz said in a note to investors. "The benefits of IGT's scale and global reach are evident in the international units and systems sales, which pushed results higher for the quarter."

In total, IGT shipped 23,400 slot machines in the quarter, a slight increase from 22,400 for the same quarter last year. However, the volume shipped to casinos in North American was down from 11,700 games to 8,300. Internationally, the company shipped almost 5,000 more machines in the quarter than a year ago.

Matthews said the tide was turning. He said the company wouldn't say how many slot machines are heading to the Palazzo for the $1.8 billion casino's December opening until its next earnings release. However, construction along the Strip, including the $2.2 billion Encore next to Wynn Las Vegas and MGM Mirage's $7.8 billion CityCenter, bodes well for IGT.

"The big thing that has not existed over the last four years was the mass expansion that you can see now just from driving down the Strip," Matthews said. "As those places open over time, we should be able to ship a fair amount of machines."

Down the road, Matthews said IGT is considering casino expansions in Kansas, continued growth in Pennsylvania and the approval of gaming compacts with American Indian tribes in Florida and California as future domestic growth.

IGT announced earnings before the trading on the New York Stock Exchange opened Thursday. Shares of the company were off initially 7 percent but rallied to close at $42.75, down 86 cents or 1.97 percent. More than 6.1 million shares were traded, three times the average daily volume.

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BALLY REPORTS EARNINGS

Bally Technologies officially reversed a loss from a year ago, saying Thursday the company had a net income $22.3 million in fiscal 2007.

The Las Vegas-based slot machine manufacturer has spent the past two years restating earnings, occasionally updating the financial markets on its progress. The company said its net income for the year that ended June 30 translated into earnings per share of 40 cents. In fiscal 2006 Bally had a net loss of $46.1 million, or 88 cents a share.

For the year, Bally Technologies said its revenues were $682.3 million, a 26 percent increase compared with $541.6 million in 2006.

"Our fourth-quarter fiscal 2007 financial results are beginning to reflect the improved financial and operational strength of Bally," company CEO Richard Haddrill said. In the quarter, Bally's revenues increased 31 percent to $202.4 million.