Operator News
US – IGT to rethink cost structure to spur future growth
By Phil - 27 March 2014
International Game Technology is taking actions to re-align its cost structure for long-term earnings growth, preserving its US$200m annual R&D investment whilst increasing its commitment to the Asian market.
In order to responsibly address the challenges facing the gaming industry and their related impact on IGT, the company is enacting cost-cutting measures including the reduction of its global workforce by seven per cent to realize expected cost savings of $30m in the current fiscal year and an estimated $50m on an annual run-rate basis.
The company is lowering its fiscal year 2014 guidance for adjusted earnings per share from continuing operations from $1.28 to $1.38 to $1.00 to $1.10. The company is also providing guidance for adjusted earnings per share from continuing operations of $0.17 to $0.19 for the second fiscal quarter of 2014.
Patti Hart, IGT CEO said: “As we reach the halfway point in our fiscal year, you can see this is a challenging time for the industry and IGT. We knew that our success in 2013 would be difficult to replicate. However, we did not expect such a sharp decline in North American gross gaming revenues, or further degradation in the international currency, compliance, and importation environment.”
In addition to the actions mentioned above, IGT is taking a number of decisive actions to position for long-term earnings growth. These include a continued commitment to improve its gaming operations performance.
It recently secured a new global licensing agreement with Sony, which provides IGT with expanded franchise rights for Wheel of Fortune through the year 2024. Alongside this it will be launching Powerbucks, a new interstate progressive jackpot, in Nevada, New Jersey, South Dakota, and Canada, expected by the end of the fiscal year. It has also reached a new agreement with Action Gaming to solidify IGT’s 90-plus per cent market share in video poker and plans to re-engineer its game development process to leverage its strength in social gaming to improve land-based game performance.
