Let's call it a case of an ebbing tide
stranding all boats.
Shares of gambling technology company
WMS Industries (NYSE: WMS) were sliding
Tuesday, reflecting a weak economy and an even weaker casino
economy.
The maker of slot machines and video lottery terminals
managed to match Wall Street's earnings
estimates of $0.36 per share, excluding one-time charges, for
its first quarter, which ended Sept. 30. Still,
shares were off more than 8% in midafternoon trading.
Revenue of $165 million narrowly missed Wall Street's
consensus when the company reported results Monday after
markets had closed. WMS said second-quarter revenue would be
in the $184 million-$190 million range --just below the
average analyst prediction of $194 million.
Fickle investors
WMS'
diverse portfolioof products, services, customers, and
locations has made its stock a steadier long-term performer
than casino operators like
Wynn Resorts (Nasdaq: WYNN) or
Las Vegas Sands (NYSE: LVS), which focus on
a few marketsand which have taken on heavy debt to
finance
giant luxuryprojects and expansion plans.
However, WMS couldn't please investors
even though first-quarter revenues beat the year-ago quarter
by 9%, while reported net income rose 26%.
The dagger was that WMS said its second quarter would
feature a trifecta of disappointments: lower spending by
casinos on new machines, a reluctance by casinos to replace
machines as quickly as they did in better times, and the
forecast of fewer casino openings versus the year-ago
period.
For those seeking the glass-is-half-full approach, WMS
says customers are expected to increase their machine-buying
budgets early next year. That was good enough for WMS to
reaffirm its revenue estimate of $760 million to $780 million
for the fiscal year ending June 30.
More fallout
Scientific Games (Nasdaq: SGMS) was another
gambling technology company with a diversified portfolio that
was getting whacked Tuesday after issuing results Monday
after markets had closed. Continued... |