Casino operators who ordered fewer slot machines sent Bally Technologies' revenues and profit down in the second quarter, the company said Wednesday.
The Las Vegas-based company posted net income of $27.2 million, or 49 cents a share, for the quarter ended Dec. 31, compared with net income of $33.2 million, or 56 cents a share, a year earlier. Revenues declined 10.9 percent to $182.7 million from $205 million.
“Second-quarter results continued to be impacted by the slow domestic replacement cycle and in systems slower- than-anticipated decisions,” Bally Technologies CEO Richard Haddrill said in a conference call with analysts. “These negatives were offset by strength in our gaming operations and good gross margins for all three of our divisions.”
Gaming operations and systems revenues both increased during the second quarter. Operations were up 12 percent to a record $77 million and systems jumped 14 percent to $46 million.
New gaming device sales fell to 6,291 units from 8,933 units a year earlier due to a continued sluggish North America replacement market and fewer new openings and expansions during this period.
Analysts surveyed by Yahoo Finance had expected earnings of 46 cents a share on revenues of $189.3 million for the second quarter.
“Bally's results were more or less in-line with our expectations,” Credit Suisse analyst Joel Simkins said in a research note. “Nevertheless, we remain comfortable that replacement demand should start to improve in the second half of 2011.”
Bally Technologies shares fell 90 cents, or 2.18 percent, Wednesday to close at $40.30 on heavy volume of 1.06 million shares traded on the New York Stock Exchange.
During the second quarter, Bally Technologies purchased approximately 475,000 of its shares for $18 million. Since Jan. 1, the company has purchased an additional 121,000 shares $5 million under its 10b-5 plan.
“These stock purchases reflect a confidence in our future,” Chief Financial Officer Neil Davidson said.
The company has about $57.4 million available for additional stock purchases.
Since November 2007, the company has steadily purchased about 5.7 million shares of its common stock for almost $200 million or an average cost of $34.73 per share.
Davidson told analysts Wednesday that the company has allocated about $20 million a quarter for the back half of the fiscal year to continue the buyback program.
During the conference call Haddrill also lowered the company's guidance for their fiscal year 2011 to $2 to $2.15 a share from $2.05 to $2.30.