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Bally Technologies shares soar with company’s turnaround

Nov 20, 2007 4:15 AM

Bally Technologies Inc. (BYI), truly one of the storied stocks of 2007, continued its upward surge on Friday, following presentations at the Global Gaming Expo and its recently filed quarterly report for fiscal year 2007.

A year ago, Bally Technologies saw its share price drop to the mid-teens while profits for the game manufacturer were hard to come by.

But in the fiscal year that ended on June 30, the company reported revenue of $682.3 million and a profit of $22.3 million. This compared favorably with the previous year’s revenues of $541.6 million and an operating loss of $46.1 million.

During the fourth quarter, the company’s revenue increased to $202.4 million from the previous year’s $154.9 million resulting in earnings of $18.5 million. In the comparable quarter, the company posted a loss of $12 million.

On a per share basis, the company had earnings of $0.33 per share while the loss from 2006 was $0.19 per share

In announcing the fiscal year results, company CEO Richard Haddrill said, "Our fourth quarter fiscal 2007 financial results are beginning to reflect the improved financial and operational strength of Bally. In addition to a 31 percent increase in total revenue, we are pleased with our progress on margins, especially the 41% in game sale margins."

The company saw gains in both its gaming operations and in its systems division.

The gaming operations jumped 61% primarily due to increases in participation and rental revenue. The installed base of centrally determined games increased 30% from 27,437 units to 35,729 units.

In the systems division, the company realized an 11% increase with its monitoring units moving up by 13% and its systems service and maintenance revenue increasing by 20%.

"We expect this momentum will continue to drive improved performance into fiscal 2008," concluded Haddrill.

In moderate trading on Friday, the company shares moved up $1.59 to $41.07 per share.

Melco PBL

Melco PBL Entertainment Ltd., a company formed by the partnership of James Packer, son of the famed Australian billionaire Kerry Packer, and Lawrence Ho, son of gaming guru, Stanley Ho, looked to ride the gaming wave in Macau by buying a sub-concession license from Steve Wynn and building a high-end casino.

But it was just that development that caused the company to report a larger loss for the third quarter.

The company said it had revenues of $113.4 million compared to last year’s $7.3 million prior to the opening of its Crown Macau casino. But the pre-opening costs of that facility caused it to lose $45.2 million or $0.37 per share compared to last year’s loss of $7.7 million or $0.15 per share.

Total operating costs ballooned to $159.7 million, primarily due to increased costs of developing its casino; amortizing its gaming sub-concession costs and additional expenses that have been developing by the company’s newest project, the City of Dreams casino on the Cotai Strip in Macau.

The company’s share price has been ranging from the mid to high-teens.

Gaming Partners

Lower sales in Macau contributed to a decline in earnings for the third fiscal quarter of Gaming Partners International Corporation (GPIC).

The company said its revenues in the third quarter were $15.2 million, down from the previous year’s $20.1 million. Net income was $387,000 or $0.05 per share compared to $919,000 or $0.12 per share in 2006.

For the nine months that ended on Sept. 30, revenues were $38.9 million, much lower than the previous year’s $57.9 million. Net loss for the nine months was $662,000 or $0.08 per share. In 2006, the company had a profit of $5 million or $0.62 per diluted share.

Management said it was disappointed in the numbers, particularly in Macau. However, based on its backlog, the company believed that the fourth quarter "will be our best quarter of 2007."