GTECH’s Q2 revenues, income miss mark

Sep 27, 2005 7:05 AM

Shares of GTECH Holdings Corporation fell on Friday following the company’s report that both revenues and earnings declined from the previous year in the quarter that ended on Aug. 27.

Executives of the world’s largest provider of lottery equipment and services said revenue during the second quarter of fiscal year 2006 fell 4.2% to $309.9 million from $325 million. Analysts had forecast earnings of $316 million.

Net income came in at $49 million or $0.38 a share compared to last year’s $53.1 million or $0.40 per share.

Wall Street reacted by pushing the share price down by $0.57 to $33.08 during a busy trading day that saw 3.2 million shares change hands. And analysts at CIBC World Markets reduced their ratings on the stock from sector outperform to sector perform.

Still, management remained confident that the company would have earnings of $1.64 to $1.70 per share for the year with revenues growing at a 9% to 10% clip.

Also, Bruce Turner, president and CEO, said the company "experienced a significant quarter-over-quarter increase in service revenues, despite difficult comparisons due to the significant jackpot activity in the second quarter of last year. In addition, we clearly benefited from increased revenue contributions from newer lottery service contracts such as Florida, Virginia and the Caribbean markets."

Also commenting, Jaymin Patel, senior vice president and CFO, said, "Based upon our current outlook, we are confident we can achieve our goals and objectives in the current fiscal year and beyond."

The company’s fiscal year ends on Feb. 25, 2006.

Recently, the company’s share price jumped 10% when it was announced that it had solicited expression of interest from an unidentified third party looking to acquire the company. It was later indicated by Wall Street sources that the investment firm of Goldman Sachs was looking at the possibility of taking the company private.