IGT shares tank as fears grow
over machine earnings

Apr 27, 2004 6:40 AM

Share price of International Game Technology (IGT) continued to fall on Monday as investors continued to be "under whelmed" by the company’s quarterly financial report last week detailing substantial growth in replacement machines.

On Monday, beginning with the opening of trading, the IGT shares continued a downtrend that has seen the share value fall about 20% from its 52-week high of $47.12. One analyst said he felt the reversal in the growing value of the company resulted from the report that indicated the company’s per day earnings per gaming machine "were lighter."

Additionally, there were no other developments regarding the potential growth by having states seeking tax assistance approve slot machines in their jurisdictions. Still on the horizon, however, are the installation of additional machines in New York State, West Virginia, Iowa, Maine and even California where negotiations are underway to have the Indian casinos pay a portion of their revenues to the state in hopes of eliminating the 2,000-machine cap per property.

Also being ignored was the apparent growth of the IGT Gaming Systems division, a unit that grew substantially with the company’s acquisition of Acres Gaming Inc. Last week, the company announced it had signed a contract with Wynn Resorts to install its Acres Advantage suite of products, including bonusing, multimedia displays and cashless gaming. The property is expected to open in the Spring 2005.

At the close of trading on Monday, IGT shares had fallen to $39.27, down $2.38 for the day.

Wembley’s auction

Directors of London-based Wembley Plc have recommended that its shareholders accept the bid of about $555 million submitted for the company by a consortium known as BLB Investors LLC.

The bid was slightly above the amount offered by MGM MIRAGE Inc. (MGG) that was caught in a bidding war when BLB Investors, that involves Starwood Hotels and Resorts Worldwide (HOT), Kerzner International Inc. (KZL) and the resort developer Waterford Group, topped their original bid. Subsequent increases by both sides brought to the purchase offer currently being considered.

Principal jewel among the several racetracks owned by Wembley is Lincoln Greyhound Park in Rhode Island, the property that provided nearly all of the U.K. company’s earnings for 2003. Before a takeover can be accomplished, however, arrangements must be completed relative to indictments involving Wembley and two former company officials.

THE INSIDER: Although supporters of a gaming expansion referendum have submitted more than 1 million signatures in favor of their proposal, four of the state legislators most powerful politicians have joined a half-dozen Indian tribes in an attempt to have the courts bar the referendum from making the ballot.

Missouri legislators have agreed to consider a proposal made by Gov. Bob Holden to raise the gaming tax by one percent and to eliminate the loss limit on gamblers.

A Louisiana parish (county) wants to tax the comps given out by casinos in their jurisdiction. Casinos affected are owned by Harrah’s Entertainment Inc. (HET) and Penn National Gaming Inc. (PENN).

Earnings announcements for the most recent fiscal quarter are going to made on Wednesday at 6 a.m. PDT by Magna Entertainment Corp. (MECA), and Multimedia Games Inc. on Wednesday, at l:30 p.m. PDT.

Mikohn Gaming Corp. (MIKN), that won’t report its quarterly results until May 11, has raised guidance for the period. It expects earnings to exceed the previous estimate of $19 million.

Analysts at Jefferies & Co. have upgraded their rating on Boyd Gaming Corp. (BYD) to a buy from a hold.

Aztar Corporation (AZR) has asked the courts to review its recent tax ruling that has substantially increased the amount the company owes the state of Indiana.

Slots at three New York State harness tracks have generated $19 million in state taxes since business began on Jan. 28.

Casino owner Don Barden has indicated he wants a racing license in Detroit should Michigan decide to permit slots at the state’s racetracks.