IGT’s earnings top Street estimates

Jan 24, 2006 3:21 AM

The share price of a publicly traded company often depends more on the estimates or projections of Wall Street analysts rather than on the company.

Case in point: International Game Technology (IGT).

Conditions within the industry appeared to be rather uninviting for the past few months so most analysts discarded most of what companies were projecting and went with even lower forecasts.

IGT, for example, had told the investment community that it could look to quarterly earnings of $0.30 while waiting for more jurisdictions to approve casino gambling. But, for the most part, analysts decided that $0.27 per share would more accurately represent the company’s earnings.

Last week, IGT reported its financial experience for the quarter that ended on Dec. 31 and set the analysts back on their heels.

Despite a drop in revenue from last year’s $641 million to the quarterly $616 million, IGT reported earnings of $0.34 per share, including a $6.1 million or $0.02 per share in stock-option expenses.

Analysts expected earnings to come in at about $562 million.

Investors reacted immediately, sending the price of one share up to $34.89, an increase of 8.8% or $2.84.

In a conference call following the announcement, TJ Matthews, company chairman and CEO, remarked, "While visibility to North America machine sales remains limited, we continue to effectively execute on our strategy to grow our international business and the contribution from non-machine product sales."

During the reporting period, IGT had an installed base of 43,300 units, an increase of 6,300 units from the prior year and 4,500 from the previous quarter. Also the company saw its gross profit margins rise five percentage points to 51% from 46%.

Shuffle Master

Shuffle Master Inc. (SHFL) announced that it was delaying the filing of its annual report to the Securities and Exchange Commission for the fiscal year that ended on Oct. 31, 2005.

The company explained that it was taking advantage of a 15-day leeway offered by the SEC in order to assemble "information necessary for the company to complete its financial statements and management’s assessment of the effectiveness of the company’s internal controls over financial reporting."

It added that in reviewing a transaction at its CARD subsidiary in which the subsidiary had recorded payment for a shipment during the fourth fiscal quarter of 2005 as opposed to recording the payment in the first quarter of 2006.

"As a result of identifying this individually non-material transaction, the company is performing analysis to assure that there are no other similar transactions related to revenue recognition issues," the company said.