GTECH Q3 results disappoint investors

Dec 20, 2005 4:17 AM

GTECH Holdings Corp. (GTK), in the news lately because of a possible takeover of the company by an investment group, disappointed analysts with the results of the third fiscal quarter that ended on Nov. 26.

Net income for the quarter grew to $47.8 million or $0.37 per share compared to last year’s net income of $45.9 million or $0.35 per share. However, analysts had expected $0.38 per share earnings.

Also, for the fourth quarter, the company advised that it expected per share earnings to be between $0.45 and $0.48 per share. This also failed to meet analysts’ expectations that were in the $0.49 per share area.

Revenues for the third quarter were $300.1 million, down 4.9% from last year’s $315.6 million in the comparable period.

For the first nine months of the 2006 fiscal year, the company reported revenues of $936.5 million, an increase of 1.9% over revenues of $919.4 in the first three quarters of fiscal 2005. Net income was $151.6 million or $1.17 per share compared to net income of $152.6 million a year earlier.

The company said the net income figure for the first nine months of fiscal 2005 included a one-time, after tax gain of $7 million or approximately $0.05 per share associated with the sale of the company’s 50% interest in Gaming Entertainment L.L.C.

Bruce Turner, president and CEO, said the "financial results were at the high end of our targeted expectations," and "we continue to make progress in our Gaming Solutions strategy."

Following the announcement of the quarterly earnings, some Wall Street observers suggested that the potential sale of the company to a private equity arm of Goldman Sachs was in jeopardy.

One analyst, Steven Wieczynski of Stifel, Nicolaus & Co. was reported as saying, "We believe that GTECH had a deal in place back in September but since that time it (the deal) has fallen apart."

American Wagering

Boosting revenue and reducing the percentage of operating expenses helped American Wagering Inc. (BETM) cut back substantially in the amount of money it lost in the three months that ended on Oct. 31, compared to the same period in 2004.

Revenues for the period reached $3.375 million compared to last year’ $2.38 million. Net quarterly loss amounted to $72,942, substantially below last year’s loss of $740,392.

For the nine months of fiscal 2005, the company reported revenues of $9.68 million, up sharply from the previous year’s $7.9 million. Operating income during the period was $308,671 whereas in 2004 the company incurred an operating loss of $286,605.

Net income for the nine months amounted to $738,241 or $0.08 per share compared to the previous year when the company suffered a net loss of $764,592 or ($0.11) per share.

President and CEO Vic Salerno said he was pleased with the operating quarter, "particularly the growth in revenue, net income and adjusted EBITDA (earnings before interest, depreciation and amortization)."

Lakes Entertainment

After resolving its accounting differences with the Securities and Exchange Commission, Lakes Entertainment Inc. (LACO) was able to file three quarterly reports for the three fiscal quarters of 2005 that ended on April 3, July 3 and October 3.

For the quarter that ended on April 3, the company reported total revenues of $4.1 million and a net loss of $2.1 million or $0.10 per share compared to a loss of $392,000 or $0.02 per share.

In the second quarter that ended on July 3, the company had revenues of $6.6 million and a net loss of $5.65 million or $0.25 per share. In the previous year, the revenues were $4.7 million with a net loss of $6.6 million or $0.30 per share.

For the third period that ended on Oct. 2, the company’s revenue was $2.1 million with a net loss of $7 million or $0.32 per share compared to revenue of $2.9 million and a loss of $1.2 million or $0.05 per share.

The company explained that is had changed the method it used to recognize "the separate elements of its development and management agreements with Indian tribes." The agreement, noted Tim Cope, president and CFO, "now puts our company into the position of being a current filer with the SEC. Our next step is to apply to the Nasdaq for relisting of our common stock on the Nasdaq National Market."