Signs of trouble from slot giant
Twelve months ago, Wall Street analysts never imagined having concerns about International Game Technology. The Reno-based company, which has a large corporate presence in Las Vegas, controls the lion’s share of the worldwide slot machine market.
IGT has been an analysts’ darling among manufacturers. Its stock price was stable and reviewers heaped praise over its products. Despite a casino industry slowdown in the slot machine replacement market, IGT still reported profits. Analysts remained bullish.
What a difference a year makes.
Last week’s resignation by IGT Chief Operating Officer Steve Morro may have signaled the start of a companywide shake-up. Gaming sources told of layoff rumors, which IGT spokesman Ed Rogich vigorously denied.
IGT CEO TJ Matthews has said the company is in a restructuring mode. Rogich said all areas will be looked at to reduce expenses.
Matthews, considered one of the industry’s brightest executives, is feeling some heat. He will add Morro’s COO duties when the resignation is complete. But Matthews is also chairman and president as well as CEO, leaving some analysts worried that management is spread too thin.
Wall Street expressed concern last week that Morro’s exit was symptomatic of IGT’s fortunes. The stock price is down almost 60 percent from a 52-week high of $49.41 on Feb. 26.
"IGT’s fundamentals, market share position, new device platform, game theme and system development progress are not likely to improve in the near term, and may have worsened since the company last communicated with investors," Merrill Lynch gaming analyst Rachael Rothman wrote.
UBS Securities analyst Robin Farley didn’t think IGT’s strategic examination would help increase earnings until the second half of 2009.
"This review will ultimately include a cost-cutting component," Farley said, adding that the current focus is on management structure.
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Gaming Control Board Chairman Dennis Neilander isn’t a Donny and Marie fan.
During a licensing hearing, Flamingo General Manager Don Marrandino said ticket sales for the show’s opening Tuesday are strong.
"I will be out of town that week," Neilander said.
Added board member Mark Clayton: "I guess that’s not going to make the marketing brochure."
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The Palazzo didn’t wait to eliminate all aspects of the 40/40 Club. The resort opened Sportsbook Bar & Grill Thursday in 40/40’s former space in time for football.
In addition to a restaurant and more than 70 flat-screen televisions, the facility has five betting windows.
Howard Stutz’s Inside Gaming column appears Sundays. E-mail him at hstutz@reviewjournal.com or call 702-477-3871.