International Game Technology expects to begin layoffs this month, part of an effort to reduce its operating costs by about $80 million to $100 million a year.
IGT executives didn't detail the size of its staff reduction. The company, which employs about 2,500 in Reno, is the largest manufacturing employer in Nevada.
In September, IGT offered buyouts to about 500 employees over age 55. The size of the buyout offers were based on the number of years employees have worked for the Reno-based maker of slot machines, and the deadline for acceptance of those offers was last week.
Involuntary layoffs are next, said TJ Matthews, the company's chairman and chief executive officer. The layoff notices are scheduled to arrive Nov. 13 and Nov. 14.
Matthews had said three months ago that IGT was getting ready to cut costs, and he acknowledged last week that the company hadn't moved quickly.
"We wanted to make sure we're doing it right," he told investment analysts.
The company's goal is to reduce its costs by $20 million to $25 million per quarter, and Matthews said much of the savings will result from staff reductions.
The company wants layoffs to be "as gentle as possible," he said, because management decisions are partly to blame for the need for cost-cutting.
In the quarter ended Sept. 30, IGT earned $52.1 million a 57 percent decline from the $122.6 million it earned in the comparable quarter last year.
Matthews said the national economy presents IGT with some of the most difficult operating conditions it ever has faced.
Casino operators, themselves pinched by effects of the credit crunch and worried consumers, have scaled back their purchases of slot machines.
Consumers, meanwhile, are pumping fewer quarters into the networks of slot machines that IGT owns, sharing the revenue with casino operations.
Even declining interest rates are a mixed blessing for the company as it needs to set aside more to fund big slot payoffs when interest rates are low.
IGT shipped 20,100 slot machines to customers worldwide in its most recent quarter, down form 23,400 a year earlier. In the fiscal year ended Sept. 30, shipments of slot machines fell to 72,700 from 105,900 units a year earlier.
Those sales figures, Matthews said, dictate a drive to get IGT's costs in line.
"We need to right-size expenses," he told analysts. Even while earnings fell sharply, Matthews noted that IGT's revenues of $2.53 billion in its most recent fiscal year were down less than 4 percent from the previous 12 months.
Some of the cost cutting will reach into the top executive suites.
Matthews said he'll assume the hat of chief operating officer in addition to his jobs as chairman and CEO. Stephen Morro stepped down as COO in September. The additional responsibilities make sense, Matthews said, because many of the challenges facing IGT these days are at the operational level.
The company cautioned investors that it doesn't see any upturn in its fortunes any time soon. Matthews said earnings are likely to bump along at their currently low level for at least the next six months.
On the other hand, he said the slot machine business is likely to revive at some point as consumers worry less about the economy and casino operators decide to invest in IGT's newest technologies.
