Mikohn makes gains

Apr 16, 2003 4:27 AM

By David Stratton

After an unsettling 12 months, Mikohn Gaming finally reported a profit.

For the fourth quarter ended Dec. 31, 2002, Mikohn reported earnings of $.02 per share, up from a loss of $.60 a share in the previous fourth quarter.

Actually, revenues were down, but a cost-cutting campaign begun by Mikohn’s new management team appears to be working for the slot and table game developer.

In addition, financial statements reveal that Mikohn had a $2.15 million (non cash) depreciation expense, so its cash flow was actually better than reported earnings would suggest.

"You’re going to see Mikohn continue to accelerate depreciation on games that they intend to replace," said a stock analyst in New York. "From that point, they will turn their attention to developing software for games that have the important ticket-in/ticket-out function, which its previous machines did not have."

Indeed, Mikohn’s new management team has created a new business model for the company that would focus on game development rather than manufacturing.

Toward that end, Mikohn has developed alliances with several large slot makers, including Aristocrat, Bally Gaming, International Game Technology and others.

So far, Mikohn’s most popular games have included Clue, Battleship, Trivial Pursuit and Ripley’s Believe It Or Not.

Mikohn’s pact with Bally Gaming involves using Mikohn’s branded games in a series of wide-area progressives using Bally’s slot machine platform. The system is currently used with Bally’s Popeye and Betty Boop slot progressives, to name a couple.

This system will be the first wide-area progressive for Mikohn games. Analysts agree that if Mikohn is successful in implementing its slot games in Bally machines, the company should continue to show increases in its quarterly earnings.