Faced with ongoing weakness in U.S. gaming markets, International Game
Technology is looking to protect its profits through cost-cutting.
The Reno-based company, which employs more than 2,500 people in northern Nevada and more than 5,400 worldwide, is the largest manufacturing company in the state.
Its earnings for the quarter ended June 30 fell 21 percent from year-earlier figures, with net totaling $108.3 million compared with $136.4 million a year earlier.
Revenues of $677.4 million compared with $706.5 million in the comparable quarter last year.
TJ Mathews, chief executive officer of IGT and chairman of its board of directors, told investment analysts last week that the casinos that buy
IGT's gaming machines have been hit hard by everything from the national economic downturn to the effects of smoking bans in some jurisdictions.
"We have to anticipate that the economic conditions are likely to continue like this for the rest of the year," he said.
And Matthews said IGT still isn't certain how much casino operators will scale back their purchases of new equipment in the face of the slowdown.
No matter what happens, he said, "Operating expenses are not at optimal levels. We need to manage expenses in a much more prudent, careful way."
At the same time, he said IGT wants to continue heavy investment into
research and development of new game titles and new gaming systems.
The company didn't provide any additional details about its cost-cutting moves.
The effects of the gaming slowdown were apparent in the quarterly earnings IGT reported:
* Revenues from its gaming operations essentially, the linked progressive networks that feature games such as "Wheel of Fortune" fell to $333.6 million from $341.9 million a year earlier. Gross profit from gaming operations fell to $202.1 million from $210.6 a year ago. Gamblers were playing less, IGT said, while lower interest rates meant it needed to spend more to finance jackpot payouts.
* Shipments of slot machines fell to 20,200 in the quarter compared with 36,900 a year earlier. International sales were off by more than 16,000 machines, as slumping orders from Japan and Great Britain were only partially offset by strong business in Latin America.
* Even with the business slowdown, operating expenses rose to $200.7 million in the quarter compared with $180.3 million a year ago. Expenses grew as the company staffed up its sales and research operations. Another factor was the higher cost of dealing with bad debt.
