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Howard Stutz

Bally Technologies reports lower earnings

30 April 2010

LAS VEGAS, Nevada -- Slot machine maker Bally Technologies, which told Wall Street earlier this month its third-quarter earnings would be off due to slower-than-expected slot machine sales, confirmed those predictions Thursday.

Las Vegas-based Bally reported net income of $23 million, or 39 cents per share, in the quarter ended March 31, down from net income of $30.6 million, or 52 cents per share, a year earlier. The company took an impairment charge of $11.4 million, or 13 cents per share, on its Alabama charitable bingo assets due to uncertainty in the market.

Revenue fell 3.2 percent to $190.6 million from $196.8 million.

Despite the lower numbers, Bally Chief Executive Officer Richard Haddrill said the company made progress on its strategic initiatives.

Also on Thursday, Bally announced a deal to provide 3,600 machines to Italy for the country's new video lottery program. The company expects to begin shipping those games this year. Bally entered into long-term agreements with two of Italy's VLT concessionaires to provide machines for the program being implemented throughout Italy in public venues.

No price or sales figures were provided.

Bally Chief Operating Officer Gavin Isaacs said the deal with Italy also includes gaming systems management products and server-based gaming tools.

Analysts said investors had already taken into account Bally's reduced third-quarter figures.

"The company preannounced a weaker third quarter than expected, reflecting slower deployment of capital from casinos in the quarter, forced closings of slot machines and weak daily yields," Morgan Joseph gaming analyst Justin Sebastiano told investors before Thursday's announcement. "Game sales estimates are expected to be down this quarter as most of those numbers are being pushed back until the fourth quarter."

When the company preannounced earnings, Bally also said it signed an agreement to sell its Rainbow Casino in Vicksburg, Miss., to Isle of Capri Casinos for $80 million. The deal hinges on regulatory approval.

Also, Bally and Isle of Capri agreed on a deal to replace a competitor's casino management system and server-based gaming product at 10 of the regional casino operator's properties.