IGT slims down more

International Game Technology plans to reduce its operating expenses by another $100 million during the next 12 to 18 months.

One target for cost-cutting will be research and development by the Reno-based developer of slot machines and gaming systems.

"We do too much," said TJ Matthews, the chairman and chief executive officer of IGT. "There will be a much more targeted effort in R&D."

He said the company's development efforts in the past have tended to create a wide variety of products to meet an equally wide variety of demand from casino operators and gaming consumers.

Instead, Matthews told securities analysts last week, he wants IGT to focus its R&D on areas in which the

company has a clear-cut advantage.

Other possible targets for cost-cutting, he said, include the company's administrative overhead and the cost of selling its products, especially as the casino business remains mired in a deep slump.

IGT reported last week its earnings for the quarter ended Dec. 31 fell to $65.7 million from $113.7 million a year earlier. Revenues during the quarter fell to $601.6 million from $645.8 million a year earlier.

During the final three months of 2008, IGT reduced its workforce by about 8 percent through a combination of early retirement offers and layoffs. About 300 of the lost jobs were at company facilities in

Reno. Company-wide, the staff reduction totaled 460 positions.

The company said it spent $17.4 million during the quarter on its restructuring on the lower end of its

earlier estimates of $16 million to $23 million to slim itself down.

IGT executives didn't say last week whether they expect any more layoffs during the continued cost-cutting.

The company saw a little bump in its sale of slot machines to North American casinos in the last three months of 2008. Shipments rose to 9,500 units from 7,300 a year earlier.

But the number of machines the company sold internationally fell by more than half.

Matthews said few new casinos will be opening anywhere in the world during the next couple of months, and IGT's shipments will suffer as a result. He said sales of slot machines may perk up a little later this year.

The other side of IGT's business the operation of networks of slots such as "Wheel of Fortune" that are linked together and offer big payouts is suffering a double-barreled whammy.

On one hand, cash-strapped consumers are dropping fewer dollars into the machines.

On the other hand, the company low interest rates mean that the company has to chip in more money to fund the jackpots that are paid out over several years.

The company said revenues in its gaming operations business during the last months of 2008 fell by 6 percent year-over-year, and the gross profit in the business fell by 19 percent.

"This is the worst economy in decades and it clearly affects our slot customer," Matthews said.

IGT reported last week its earnings for the quarter ended Dec. 31 fell to $65.7 million from $113.7 million a year earlier. Revenues during the quarter fell to $601.6 million from $645.8 million a year earlier.

During the final three months of 2008, IGT reduced its workforce by about 8 percent through a combination of early retirement offers and layoffs. About 300 of the lost jobs were at company facilities in Reno. Company-wide, staff reductions totaled 460 positions.

The company said it spent $17.4 million during the quarter on its restructuring on the lower end of its earlier estimates of $16 million to $23 million to slim itself down.

IGT executives didn't say last week whether they expect any more layoffs during the continued cost-cutting.

The company saw a little bump in its sales of slot machines to North American casinos in the last three months of 2008. Shipments rose to 9,500 units from 7,300 a year earlier.

But the number of machines the company sold internationally fell by more than half.

Matthews said few new casinos will be opening anywhere in the world during the next couple of months, and IGT's shipments will suffer as a result. He said sales of slot machines may perk up a little later this year.

The other side of IGT's business the operation of networks of slots such as "Wheel of Fortune" that are linked together and offer big payouts is suffering a double-barreled whammy.

On one hand, cash-strapped consumers are dropping fewer dollars into the machines.

On the other hand, the company's low interest rates mean that the company has to chip in more money to fund the jackpots that are paid out over several years.

The company said revenues in its gaming operations business during the last months of 2008 fell by 6 percent year-over-year, and the gross profit in the business fell by 19 percent.

"This is the worst economy in decades and it clearly affects our slot customer," Matthews said.