International Game Technology (IGT) – manufacturer of slots and gambling software, has posted its 2014 Q2 earnings report in which the company reported a 66% decline in earnings. During the quarter, IGT posted a net income of $25.7 million, compared to the $78.2 million generated in the same three-month period in 2013.
Further bad news regarding corporate performance saw the slot manufacturer post a net revenue of $512.8 million in the quarter which represented a 15% decrease on 2013 figures.
After the tough quarter IGT senior management may lower the company’s financial targets, as the company undertakes cost restructuring. At the end of March, IGT told investors it was laying off 7 percent of its global workforce — roughly 350 to 375 positions. The cost-cutting measures will translate into savings of $30 million in the current fiscal year and $50 million annually in coming years.
“During the quarter, we took decisive action to reduce IGT’s cost structure and position the company for long-term earnings growth,” IGT CEO Patti Hart said in a statement. “Looking forward, we are confident that we will be able to leverage our leaner cost structure, substantial research and development investments and premium brands to drive shareholder value.”
Speculating on the company’s poor performance – Principal Analyst Todd Eilers of Eilers Research commented that the company had been losing “premium leased space on casino floors” to smaller competitors. In Eilers Research recent survey of slot floor managers, Eliers stated that IGT faced intense competition from large and small vendors.
“Based on our latest slot survey, we believe Aristocrat (Technologies) took significant market share in the premium leased segment once again in the quarter,” Eilers said. “In addition, smaller vendors continue to chip away at the nonwide area progressive premium leased space.”