Saturday, July 30, 2005

Jeffries on the IGT quarter

  • EPS for the quarter came in 2 pennies better than consensus but management maintains $0.30/quarter EPS guidance for next 6 quarters.
  • Co. guides to $100 million per quarter in buybacks
  • Jeffries still likes the story into 2007 (some 2006 events pushed out)
  • Slot opportunities in FY06
    • at Mandalay and Ceasar's properties with new management teams in place (acq's)
    • Boyd's South Coast - 2700 slots
    • River Rock Station - 2700 slots
    • Borgota expansion - 700 slots
    • 2 racetracks in NY - 2500 each
    • Macau Stanley Ho's - 2000 slots
  • Opportunities beyond FY06
    • PA - 14000 slots
    • Venetian Macau - 5000 slots
    • MGM Macau - 1000 slots
    • Racetracks in FL - 3 @ 2000 each
    • CA taken out of Jeffrie's model
    • UK - 6000 slots
    • Big Vegas expansion in 2006-08
  • Intelligent Table System (partnership with Progressive and Shuffle) could be ready for a demo at G2E show in Sept. 2005, rollout in 2006
  • Server based gaming schedule - "living labs" in 2005, tests throughout 2006, regulatory approval in 2007, material sales impact in 2008.
  • Also, Bear Stearn's mentioned strong outlook for IGT's Japan sales (partnership with Sammy). BS expects huge 4Q sales into Japan. BS also mentioned enormous market in Russia, IGT just getting to work there.

For me, guidance was a bit disappointing and Jeffries mention of CA a bit surprising, but I remain a committed long. IGT is financially very strong and should benefit from gaming expansion and server based transition in 2006-10.

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