WMS reshuffles the corporate deck

Jan 29, 2002 9:04 AM

With second-quarter earnings expected to come in below analysts’ estimates, WMS Industries is shaking things up.

The Waukegan, Ill., game maker has laid off 50 employees, including a dozen in Las Vegas. Among the casualties: the vice president for engineering, the vice president for satellite operations and game designer.

“It’s tough when you can’t get your software to work,’’ said one source. To shore up operations, WMS has hired an engineering executive from Motorola and former Gaming Control Board chairman Steve DuCharme to shore up the compliance division.

With its stock hitting a 52-week low this month, WMS also announced a $20 million buy-back program. Share prices have plummeted from $33 to around $17 in the past year.

“Given our continued confidence in WMS Industries’ long term outlook, the attractive valuation of our common stock and WMS’ solid balance sheet with over $90 million of cash and no debt, WMS’ Board of Directors believes share repurchases represent an excellent use of capital,’’ CEO Brian Gamache said.

Despite that rosy scenario, some market insiders aren’t so optimistic. “WMS has basically been a one-hit wonder with its Monopoly game,’’ said one skeptic. Critics say the widespread layoffs may be more a case of desperation than reorganization.

First quarter net income was $5.8 million (18 cents per diluted share), compared with $9.5 million (30 cents per diluted share) the year before. Now, as WMS predicts softer results for the current quarter and IGT gains steam with its Anchor acquisition, more hard times may lay ahead.