Bally Technologies (BYI) Shares Jump on Strong Gaming Outlook

May 13, 2008 2:41 PM EDT

Bally Technologies, Inc. (NYSE: BYI) shares jump 10.5% after reporting record earnings and revenues for the third quarter. The company reported Q3 EPS of $0.56, 8 cents better than the analyst estimate of $0.48. Revenues for the quarter were $233 million, $2 million higher than analyst estimates. However, the key is what was said by Bally executives.

"The continued momentum in all of our technology businesses drove record third-quarter earnings," said Richard M. Haddrill, the Company's Chief Executive Officer. "Another strong systems quarter reflects the continued demand for our Networked Floor of the Future technologies and vision highlighted by new customer contracts and demand for our iVIEW(TM) network that delivers interactive player content."

"Our gaming equipment division shipped over 7,300 sale units in the current quarter, which included a significant number of sale units delivered to a major domestic lottery that were not recognized in revenue in the current quarter," said Gavin Isaacs, the Company's Chief Operating Officer. "We are pleased with our steady increase in North America ship share, our ability to leverage our broad product portfolio for Class III, Class II, and central-determination markets, and the growth of international units to 25% of our total sale units in the current quarter. We attribute this success to our investments in game content and our recent investments in our international infrastructure."

For FY08 adjusted EPS is now estimated between $1.93 to $2.05, from an earlier range of $1.75 to $2.05. The Company now expects revenue for fiscal 2008 to exceed $885 million, representing a 30-percent increase over fiscal 2007. (Consensus is $1.79 and $894.02 million, respectively)

The Company initiated fiscal 2009 guidance for Diluted EPS of $2.10 to $2.50 and Adjusted EPS between $2.27 to $2.67. (Consensus is $2.24)

The Company's fiscal 2009 Diluted EPS and revenue guidance anticipates continued year-over-year growth in each of game sales, gaming operations, and system revenues. The Company forecasts an increase in the placement of premium daily-fee games and rental games, a modest increase in the number of gaming devices sold with continued margin improvements on game sales, and continued growth in its system business. The Company also expects its selling, general and administrative expenses as a percentage of revenue to be lower in fiscal 2009 as compared with fiscal 2008 and expects improved operating margin in fiscal 2009 as compared with fiscal 2008.

Bally Technologies, Inc. is engaged in designing, manufacturing, distributing, and operating gaming machines and computerized monitoring systems for gaming machines. [SM]

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