Bally Technologies reports lower revenue during quarter

Slot machine maker Bally Technologies saw its net income and revenues decrease during the Las Vegas-based company's first quarter.

For the three-month period that ended Sept. 30, Bally Technologies said Wednesday it had net income of $34 million, or 40 cents per share, compared with $48.4 million or 50 cents a share for the same period a year ago.

Bally Technologies said its net revenues were $170.8 million, compared with $187.3 million a year ago.

The company saw declines in both sales of slot machines and gaming systems. The number of slot machines sold during the quarter declined 28 percent year-over-year.

"Delays in certain decisions and the unfavorable timing of some go-lives related to our systems resulted in lower than normal quarterly systems revenues, however, we continue to see strong growth opportunities in systems," Bally Chief Executive Officer Richard Haddrill said in a statement. "We are well positioned to capitalize on our innovation in new products and our investments in new jurisdictions in 2011."

Bally said there were post-closing adjustments related to the sale of the company's Rainbow Casino in Vicksburg, Miss., during the quarter, which reduced its gain on the sale $400,000.

Bally Chief Operating Officer Gavin Isaacs said revenues in gaming operations, where the company receives revenues from slot machines leased to casinos, was $79 million, up from $72 million a year ago. He said the increase was driven by the placement of new premium games throughout the quarter.

Roth Capital Markets gaming analyst Todd Eilers said Bally's results were impacted by the sluggish replacement market. Also, the growth of Japan-based Konami Gaming has sliced into Bally's market share.

"Furthermore, we note Bally is leasing games in Maryland while competitors are selling, which is likely to depress ship share by a couple of percentage points," Eilers said.

Credit Suise gaming analyst Joel Simkins said the results from Bally could impact how Wall Street views competitors WMS Industries and International Game Technology.

"Nevertheless, we remain comfortable that replacement demand should start to improve during early 2011," Simkins said.

Bally announced earnings after the stock markets closed Wednesday. Shares of the company closed at $35.80 on the New York Stock Exchange, up 30 cents or 0.85 percent.

Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871.