Inside Asian Gaming

INSIDE ASIAN GAMING | April 2014 38 A Behemoth on the Block? IGT presents an attractive acquisition opportunity for any number of buyers, speculates Wall Street S truggling with declines in its regional markets in the United States and a challenging business climate overseas, International Game Technology is cutting its global workforce, and analysts are wondering whether the slot giant isn’t ripe for acquisition. Chief Executive Patti Hart said the company is shaving staff by 7% corporate-wide, 350-370 jobs, for a projected savings going forward of US$30 million-$50 million. The company also has lowered its earnings guidance for fiscal 2014 from $1.28-$1.38 per share to $1-$1.10, citing lower revenue expectations in the States and “further degradation in the international currency, compliance, and importation environment.” News reports cite Stifel Nicolaus Capital Markets gaming analyst Steven Wieczynski as saying he expects the news would “further erode any remaining near-term support behind IGT shares”. Specifically, he noted ongoing weakness in results from participation games, a major segment of the company’s US business. Janney Montgomery Scott’s Brian McGill has echoed that sentiment. “IGT has seen a clear deterioration in its base of premium games going back to fiscal year 2007, as its hit Wheel of Fortune game has slowly lost popularity.” Wheel of Fortune, he noted, has declined from 35,000 units at its peak to roughly 15,000. Despite the highnote struck in the fiscal first quarter—net income up 21% on a 2.1% increase in revenues achieved in the face of what the company termed “market challenges”—analysts see the Reno, Nev.-based slots and systems giant ceding more of its US-leading market share to re-energized rivals such as Bally Technologies, which has bulked up with the purchase of SHFL Entertainment, and WMS Industries, now under the umbrella of lottery giant Scientific Games. Japan’s Konami Gaming and Australia’s Aristocrat Technologies also are gaining share. Even smaller competitors like Novomatic, Multimedia Games and Australia’s Ainsworth have gotten more aggressive. FEATURE IGT’s Las Vegas office