The soft national economy resulted in a loss of $488,000 for Reno's GameTech International in the quarter ended July 31. This compares with profits of $1.1 million in the same quarter a year earlier.
The problem was weak sales, said Jay Meilstrup, president and chief executive officer of the publicly held maker of electronic bingo systems and video lottery terminals.
Revenues for the quarter totaled $13.4 million compared with $16.6 million a year earlier. Contributing to the decline were cutbacks in purchasing by the gaming industry as the national economy weakens as well as price competition in the bingo business, Meilstrup said.
He said earnings are likely to remain volatile from quarter to quarter until GameTech can widen its base of revenues. He said the company continues to work on products for the newly developing markets for wireless gaming.
It's also looking to expand distribution of the video lottery systems manufactured by its Summit Gaming subsidiary into new international and domestic markets.
California regulators recently approved a Keno game developed by GameTech. While that opens new markets, the company also noted that it needed to invest upfront capital into the creation of that game.
Adding to the company's loss for the quarter was a decision to write down the value of auction-rate securities it holds by $100,000.
The company held about $2.8 million in auction-rate securities at July 31, and GameTech said the securities continue to pay interest. But the market has frozen for auction-rate securities, which were originally marketed as highly liquid securities that paid higher returns than competing investments.
Meilstrup said GameTech had about $9.6 million in cash and equivalents on its books as of July 31 a figure that doesn't include the troubled auction-rate securities and the company feels comfortable it has enough cash to meet its operating needs and repay its debts.
The company had $22 million in long-term debt on July 31, largely reflecting money it borrowed for the $40.9 million acquisition of Summit Gaming a year ago.
