IGT posts a quarterly loss, but sees stablizing market

International Game Technology, the largest private-sector employer in Washoe County, had good news and bad news last week.

The bad news: IGT lost $21.3 million in the quarter ended Sept. 30.

The good news: Executives of the slot-machine company think things are getting at least a little better.

IGT's revenues for the quarter fell to $514.6 million from $632.2 million a year earlier. It shipped about 12,100 slots to customers worldwide during the quarter, compared with shipments of more than 20,000 a year ago.

And its gaming operations business which links networks of slots together to create big payouts posted revenues of $283.2 million compared with $331 million a year earlier as consumers held more tightly onto the quarters in their pockets.

The quarterly loss also reflected a decision announced by the company to swallow the costs of a couple of soured investments.

Last month, IGT said it was writing down the value of an investment in Walker Digital Gaming Inc., a developer of networks for casinos, by $78 million. IGT also said it was writing down an investment in Las Vegas Gaming International by $13 million.

But the company's executives think they see a flickering of light at the end of the tunnel.

Patti Hart, chief executive officer, said casino operators are feeling a little more optimistic, and they're more willing to talk about new machines for their slot floors.

"We have been encouraged by modest upticks in spending by many of our casino operator customers over the past two quarters," Hart said.

Replacement of existing machines is far more important these days than installation of slots in new casinos.

Out of the 4,200 slots that IGT shipped to North American markets during its last quarter, for instance, 3,800 of them were replacement machines. And every one of the 7,900 machines that it sold internationally was a replacement.

Consumer spending on gaming, meanwhile, appears to be stabilizing, Hart said. Revenues at the 61,400 units operated by IGT's gaming operations unit have been flat after posting sharp declines when the recession was taking hold.

But IGT still isn't willing to bet on the timing or the extent of a recovery, and it's continuing to tighten its belt. A round of cost-cutting that began in late 2008 resulted in savings of about $135 million a year.

Operating expenses during the most recent quarter ran about 16 percent below year-earlier figures, the company said.

Hart, who took the reins at IGT this spring, said she's making headway toward her goal of ensuring that the company is focused on development of excellent products and moving quickly to meet customers' needs.

A new sales structure, for instance, establishes a single account manager as the IGT point of contact with a casino customer.

For the fiscal year that ended Sept. 30, IGT reported a profit of $149 million on revenues of $2.11 billion.

This compares with a profit of $342.5 million on revenues of $2.5 billion a year earlier.