IGT optimistic after cost cutting

LAS VEGAS, Nevada -- International Game Technology executives are happy to put fiscal 2009 behind them.

The Reno-based company has been occupied over the past 18 months by a corporate shake-up and cost cutting.

On Thursday, the Reno-based slot machine giant said it ended the year with a $77 million noncash investment write-down, sending IGT to a fourth-quarter net loss of $21.3 million.

Still, IGT Chief Executive Officer Patti Hart, who took over the company's day-to-day operations in April, said the last two quarters have been beneficial for the slot maker.

"Our fiscal 2009 results reflect a challenging operating environment which we believe stabilized during our fiscal third and fourth quarters," Hart said in a statement.

The company has cut about $200 million in annual costs that will continue into the next fiscal year.

IGT warned investors last month the charge was coming in its quarterly earnings statement.

The net loss translated into a loss per share of 7 cents. A year ago, IGT earned $52.1 million, or 18 cents a share.

Analysts surveyed by Thomson Reuters, who usually exclude one-time items from their estimates, predicted earnings of 17 cents per share.

IGT's total revenues in the quarter that ended Sept. 30 were $514.6 million, compared with $632.2 million a year ago.

For the fiscal year, IGT said it had revenues of $2.1 billion, down from $2.5 billion in 2008, and net income of $149 million, down from $342.5 million the prior year. The company said it earned 51 cents per share in fiscal 2009, down from $1.10 per share in 2008.

Hart said IGT, which will unveil its new product lines at the Global Gaming Expo in two weeks, including slot machines themed on the television shows "Sex and the City" and "The Amazing Race," expect casinos to start replacing older slot machines in the coming year.

Over the past 18 months, casinos have held back on spending on new gambling products because of the slowing economy.

"While we remain cautious on the timing and extent of the replacement cycle, we have been encouraged by modest upticks in spending by many of our casino operator customers over the past two quarters," Hart said.

IGT said it placed 6,100 slot machines in North American casinos in the fourth quarter, down from 11,000 a year ago. For the fiscal year, the company shipped 26,400 games, down from 37,100 in 2008.

On the international front, IGT said it shipped 9,500 slot machines in the quarter, compared with 11,200 in the same quarter a year ago. The company shipped 29,800 games internationally in all of fiscal 2009, compared with 37,100 in the prior year.

Roth Capital Markets gaming analyst Todd Eilers said IGT offered customers discounts and other incentives to boost slot machine sales last year.

But casinos may be willing, he said, to spend more on games in 2010.

"While we are cautious in the near term, we look for all suppliers (including IGT) to benefit from increased domestic replacement demand in calendar 2010 and new jurisdictional expansions over the next several years," Eilers told investors.

Hart said IGT is not counting on sales in new jurisdictions next year, even though Ohio approved the construction of four casinos. She said regulations and other jurisdictional matters still need to be cleared by Ohio lawmakers.

IGT reported earnings after the stock markets closed Thursday. Shares of the company closed at $18.56 on the New York Stock Exchange, down 4 cents, or 0.22 percent. Shares were up slightly in after-hours trading.