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LAS VEGAS, Nevada -- Slot machine giant International Game Technology said Tuesday it will lay off a yet-to-be determined number of employees by Jan. 5 due to the troubled economy.
In an e-mail to employees, IGT Chairman and Chief Executive Officer TJ Matthews said the number of layoffs will be based on how many workers accept a voluntary separation program that was introduced last week. IGT spokesman Ed Rogich said roughly 500 employees, age 55 and over, were offered buyouts.
"As we continue efforts to reduce expenses and restructure the company to maximize efficiencies in light of a strained economic environment, it has become evident that we must conduct an involuntary reduction in our work force in addition to our other efforts," Matthews said in the e-mail.
IGT employs roughly 5,400 workers worldwide, including 3,000 employees at its corporate headquarters in Reno. At the company's secondary headquarters in Las Vegas, IGT employs about 1,000 workers.
IGT, the gaming industry's leading slot machine manufacturer, has hit rough times this year. Profits are weaker than they were a year ago, the company's chief operating officer resigned earlier this month, and IGT's stock price is down more than 60 percent from its 52-week high of $49.41 on Feb. 26. Shares of the company closed Tuesday at $18.81 on the New York Stock Exchange, up 2 cents, or 0.11 percent.
Rogich said IGT is going through a strategic review of all divisions to see where cuts can be made. The first step is to gauge response to the buyout program.
"Part of the process is to make people aware of our intentions that there may be further cuts," Rogich said. "We're trying to be up-front with employees and give them all the information they will need."
Macquarie Capital gaming analyst Joel Simkins said he was not surprised by news of the impending layoffs. He said the slot machine maker has about 1,200 workers in engineering, an area he said could be reduced.
IGT has also spent millions on server-based gaming, which may not be introduced to casinos as quickly as hoped. IGT spent $76 million in June to acquire a European slot machine rival as part of its server-based gaming efforts.
"The company needs to get leaner," Simkins said. "There are a lot of incremental expenses that can be cut."
Matthews told IGT workers the company was not closing its Reno headquarters nor are the layoffs focused in one department. A decision regarding the layoffs is expected to be made by November with the jobs being eliminated in January.
"My hope is that through these efforts, we can stabilize our spending to be aligned with our revenue forecasts and be in a position to weather the near-term uncertainty that is prevalent in our industry and our economy in general," Matthews said.
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