IGT Posts Another Quarter of Record Earnings

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International Game Technology reported another quarter of record earnings Thursday but cautioned that a prime driver in the company's growth of late will slow in coming months.

The Reno-based leader in slot machine manufacture reported net income of $141.1 million on revenues of $618.9 million for the third quarter ending June 30.

Revenues were up 10 percent over the same quarter last year, the company said.

The report marked the 18th consecutive quarter in which earnings improved over the previous quarter, and the 38 cents-a-share return exceeded the consensus of analysts surveyed by Thomson First Call by a nickel.

IGT stock was $31.95 a share, down $1.96, in late-morning trading on the New York Stock Exchange.

For the first nine months of the fiscal year, net income totaled $434.4 million, or $1.19 per share, compared with $282.4 million in revenues, or 80 cents per share, for the same time last year.

Much of IGT's growth over the past four years has been fueled by heavy demand for replacement machines as casinos upgrade to cashless technology.

In a conference call with Wall Street analysts, IGT executives said they expect that demand to slow, but added that expanding markets in the United States and abroad as well as developing new gambling systems will provide continued opportunity for company growth.

"It is a shrinking market," IGT Chief Executive TJ Matthews said of the replacement demand.

Of the 22,500 machines IGT sold domestically in the third quarter, 17,800 were replacement machines, the company said.

But Matthews said expanded tribal gambling in California, Pennsylvania's recent authorization of up to 61,000 slot machines and other emerging venues will provide new opportunities for IGT to sell more machines and develop new system technologies to remain an industry leader.

"We expect to make new markets for ourselves," Matthews said.

The company projected annual growth of 15 percent over the next five years.

Pennsylvania represents the "largest new slot machine market" since the late 1990s, when California authorized slots at Indian casinos, he said.

New compacts between the state of California and Indian tribes that allow for additional slot machines will mean about 35,000 new slot machines in the Golden State, for a total of about 90,000, Matthews said.

Other states, as well, Matthews said, will consider gambling as a way to offset budget constraints in the years, opening up new markets.

Matthews also predicted expansion in international markets such as the United Kingdom, Asian Pacific region and Eastern Europe, including Russia.

IGT is the world's largest maker of slot machines and other gambling devices, commanding about 70 percent of the industry market.


On the Net:

IGT: www.igt.com