Barron’s investment weekly says:
Don’t lose hope in IGT

Sep 7, 2004 5:00 AM

Long-term investors in International Game Technology (IGT) have taken their lumps during the past year but that may be coming to an end, says an article in the current issue of Barron’s

In the weekly financial publication’s opinion, the company offers excellent long-term value primarily because of the approaching demand of new gambling venues such as Pennsylvania.

The article pointed out that IGT has suffered a decline of nearly 40% in its share price during the past 52 weeks and has had trouble staying above $30 a share. On Friday, during a lackluster trading day, the company’s shares closed at $30.10.

Pushing the share price lower, the article noted, were several concerns including the fact that many casinos have already covered their gaming floors with the new ticket-in, ticket-out upgrades; the hope for new gaming jurisdictions seems to be decreasing, and the announced mergers of such giants as Caesars Entertainment (CZR) with Harrah’s Entertainment (HET), and Mandalay Resort Group (MBG) with MGM MIRAGE (MGG) will reduce the amount of capital to be invested in new products.

Forget the problems, advises Barron’s. The growth of America’s appetite for gaming insures that other states will join Pennsylvania whose lawmakers have authorized the placement of up to 61,000 slot machines at more than a dozen gaming venues.

Another IPO

In a period when Wall Street is looking more favorably at initial public offerings, even though a company like Google has changed the way such offerings can be made, Sheldon G. Adelson, chairman and CEO of Las Vegas Sands, has notified the SEC that his company plans to go public.

In its initial public offering, Las Vegas Sands will offer to sell as much as $350 million in common stock. Up until now, Adelson has used bonds and other financial instruments to fund developments such as the Venetian on the Las Vegas Strip and his casino in Macau.

There was no accompanying information regarding the IPO as to the number of shares to be offered and at what price. Officials indicated that further information would be forthcoming but that Adelson would retain his majority ownership interest.

Pinnacle score

A confident Dan Lee believes that his Pinnacle Entertainment Inc. (PNK) would be chosen by the Missouri Gaming Commission to develop casinos in downtown St. Louis and in south St. Louis County.

And Lee, chairman and CEO of Pinnacle, was right.

Last week, the commission chose Pinnacle over competing proposals submitted by Harrah’s Entertainment Inc. (HET), and Riviera Holdings Corp. (RIV).

In its presentation, Pinnacle said it would spend $200 million for a casino and five-star hotel on St. Louis’ Laclede’s Landing that would open in 2006. As for the second project, the company said it would invest $300 million for a county complex in Lemay to open in 2007.

THE INSIDER: The shares of Shuffle Master Inc. (SHFL) have been upgraded by Roth Capital from its previous rating of neutral to buy.

Also, the analysts at Banc of America Securities have upgraded the shares of Wynn Resorts (WYNN) to a buy from neutral.

Scientific Games Corporation (SGMS) has been chosen by the Texas Lottery Commission to provide it with lottery tickets and services.

International Game Technology (IGT) has announced plans to consolidate its nine Las Vegas buildings into one facility.

The Navajo Nation Council has voted to remove from its November election ballot a referendum to allow gambling on the Navajo reservation. The reservation spreads through areas of New Mexico, Arizona and Utah.