AGEM index

Mar 16, 2010 4:42 PM

But gaming manufacturers still optimistic

At the beginning of March, there was little movement in the AGEM Index, which tracks the stock prices of key gaming equipment manufacturers, as the net impact of gains and losses in February remained relatively unchanged from the previous month.

The index fell modestly by 0.60 points, or 0.6 percent, to close at 102.28. Earnings reports for the fourth quarter of 2009 are under way and the AGEM (Association of Gaming Equipment Manufacturers) Index, similar to the broader equities markets, is reflecting investor reaction – one of caution.

Markets in general remain down for the calendar year, but up significantly from the lows reached 12 months ago. On a year-over-year basis, the AGEM Index and the S&P 500 are up 82.3 percent, and 50.4 percent, respectively.

Wall Street analysts say investors have remained cautious as consumer confidence and the labor market continue to show weakness.

Selected positive contributors to the index during the month include slot makers Konami Gaming with the largest contribution, adding 1.32 points to the index based on a 10.01-percent increase in its stock price; and Aristocrat Technologies which contributed 0.54 points with a 6.55-percent increase in its stock performance.

On the other side of the scale, selected negative contributors to the index include Lottomatica with its stock price falling 7.87 percent, contributing -1.81 points to the index; and International Game Technology (IGT) which posted -1.18 points to the index with a 4.31-percent decline in its stock valuation.

Analysts say the economy is still impacting investor confidence. Additionally, housing, consumer confidence and spending remain fragile creating a longer road to recovery.

However, gaming expansions in key jurisdictions remain a bright spot for slot manufacturers, who should begin to reap the benefits of gaming expansion later this year, as early as next summer, according to some analysts.

In the state of Nevada, gaming activity was largely mixed, though any signs of growth is welcomed with optimism. WYNN signed on the dotted line to take over the Foxwoods project in downtown Philadelphia; Delaware passed its table games bill as expected; a bill to expand gaming at six locations (15,000 slots) in New Hampshire was filed; Minnesota is looking at approving slots at the two Twin Cities race tracks; the Kansas Lottery came to an agreement with the Chisholm Creek partners; Las Vegas Sands made a pitch for up to six new mega-resorts in Florida; and a new casino ballot measure was approved in Maine that voters will decide on in November.

While casino operators expressed caution with respect to trends in Las Vegas, which translates to minimal orders for new slot machines, there are hopeful signs across most measureable metrics in Las Vegas: visitation has posted positive growth for four consecutive months, gaming revenues have increased (largely on the strength of baccarat) and last month’s Chinese New Year celebration was very strong.