Analysts see promise in IGT

20 December 2011

LAS VEGAS, Nevada -- Even before hosting an event for stock analysts in New York City on Dec. 14, praise had poured in for slot machine giant International Game Technology.

"We believe (IGT) will likely outperform over the next year driven by improved game content, a significant pickup in new and expansionary U.S. slot (machine) demand, and initial placements from two large Canadian Video Lottery Terminal contracts," Roth Capital Partners gaming analyst Todd Eilers said.

The comments didn't change after the half-day presentation.

Analysts said the troubles that plagued competitor WMS Industries earlier this year helped IGT regain investor confidence.

"IGT has the hot hand in content currently," JP Morgan gaming analyst Joe Greff said. "We believe IGT's progress has been accelerated by WMS' woes. Investors are ignoring the potential of a WMS relative resurgence and any impact on IGT."

The event -- sort of a mini-Global Gaming Expo-type presentation to Wall Street researchers -- was IGT's first formal analyst day since the middle of the last decade. The company is coming off October's G2E trade show in Las Vegas where its newest games were roundly praised by the investment market.

Credit Suisse gaming analyst Joel Simkins thought IGT management was "frustrated" that the company's share price on the New York Stock Exchange had not performed better over the past 12 months, declining by 1 percent.

Simkins, who told investors he viewed IGT as "the best-in-class equipment supplier," needs to blame internal management decisions for the company's stock price.

"Some of the recent choppiness in shares is due to the company's ultraconservative guidance for fiscal 2012," Simkins said. "(It) does not match the trends we continue to observe in the field as IGT is gaining shipped share while its recurring revenue games are performing at their best level in years."

IGT used the investor day to unveil the IGT Cloud, an information technology service that would deliver gaming machine content to casinos through a network. The company plans to launch IGT Cloud with several casinos in Europe and Latin America. IGT developed the technology with New York-based CA Technologies.

According to IGT, the network is the next step beyond server-based gaming technology in the delivery of casino games and systems.

Analysts had varying views on the IGT Cloud.

"Although in the early stages of development, management believes its cloud capabilities could serve as an impetus to growth within its systems business," Stifel Nicolaus Capital Markets gaming analyst Steven Wieczynski said. "The long-term prospects of IGT's cloud offerings are particularly compelling, as they are designed to serve as a value-add mechanism for operators and casino patrons alike."

Deutsche Bank gaming analyst Carlo Santarelli said it might be a risk for IGT to base 50 percent of the company's planned $500 million in annual revenue growth on the interactive division and the IGT Cloud.

"The revenue goal may be considered lofty by some given its dependence on new and somewhat unproven revenue streams," Santarelli said.

IGT Chief Executive Officer Patti Hart took over day-to-day operations in April 2009.

At the time, the company was retrenching following an economic decline, which zapped sales of new slot machines and delayed the rollout of a much-anticipated server-based gaming system. IGT eliminated some 700 jobs and cut more than $200 million in annual corporate expanses.

Hart restructured the corporate management and culture with a focus on technology. IGT hired experienced executives from firms in California's Silicon Valley, similar to Hart's background.

The company's server-based gaming system business flourished in the past year. IGT signed deals with casinos in Indian gaming markets and several foreign casinos, landed the Canadian VLT deals in Quebec and Alberta, and is poised to benefit from new casino openings in 2012 and 2013 in Ohio, Atlantic City, Louisiana and Missouri.

"After posting several years of declining ship share, IGT is on track to record its first year of market share gains on game sales in over eight years," Eilers said.

Related Links
Williams Interactive Software Details
Global Gaming Expo (G2E) 2011


Copyright GamingWire. All rights reserved.
Featured Vendors
Rymax Marketing Services, Inc.
Slot-Tickets Worldwide
Rymax Marketing Services, Inc.
Leader in creating award winning player & employee loyalty programs & events proven to increase ROI
Slot-Tickets Worldwide
Slot-Tickets® Worldwide, The Original and Still the Best.
TribalHub
Sunkist Graphics, Inc.
TribalHub
22nd Annual TribalNet Conference & Tradeshow Nov 8-11, 2021 Gaylord Texan Resort, Grapevine TX
Sunkist Graphics, Inc.
Specializing in the creation of best-of-breed gaming graphics - slot glass, sign faces, and more
Breathe Easy with Smokefree Casinos- a project of the American Nonsmokers’ Rights Foundation
Casino Essentials
Breathe Easy with Smokefree Casinos- a project of the American Nonsmokers’ Rights Foundation
Breathe easier during COVID-19. We can help you reopen smokefree for everyone’s health.
Casino Essentials
The Ultimate Online Training Platform for the Casino Industry
Casino Schedule Ease
Castle Merchandising Inc
Casino Schedule Ease
Get a 90-Day Free Trial of 100% contactless, customizable table game & full casino scheduling
Castle Merchandising Inc
Brand Name Products for your Player Rewards and Loyalty Programs
Betson Imperial Parts & Service
Elite Gaming USA
Betson Imperial Parts & Service
You one stop shop for all your gaming and OEM needs!
Elite Gaming USA
Provides a diverse inventory of refurbished gaming equipment and supplies from top manufacturers
Slot Machines Unlimited
Bar Maid Corporation
Slot Machines Unlimited
Exporter of IGT, Williams, AVP, Trimline, Aristocrat, Konami, Bally, & parts over 20 yrs experience
Bar Maid Corporation
Clean and dry thousands of chips, dice and tiles per hour with the high-speed CHIP CHAMPION machine!
Gaming Tickets, Inc.
Gaming Tickets, Inc.
35 years in the gaming industry - premium quality slot tickets, lottery tickets on time under budget


Your Guide to 15,778 Gaming Industry Suppliers