US – AGEM Index dips slightly in OctoberBy Phil - 10 November 2014
In October 2014, the AGEM Index fell a modest 0.51 points, or -0.3 per cent, when compared to September 2014 to a composite index of 186.99.
October represented the second consecutive monthly decline in value while the index was down in eight of the past 12 months. Compared to a year ago, the AGEM Index remains off 6.51 points, down 3.4 per cent, which represents the first annual decline since April of 2011.
In October, a total of 10 of the 17 global gaming equipment manufacturers reported declines in stock price when compared to September. Meanwhile, six manufacturers reported stock price increases, and Ainsworth Game Technology (AGI) posted a flat performance from the prior month.
Broader equities markets trended in a positive direction, contrasting with the AGEM Index. The Dow Jones Industrial Average ended the month at 17,390.52, which was up 2.0 percent from September. The S&P 500 reported a 2.3-percent gain during the month, rising to 2,018.05. NASDAQ witnessed the greatest monthly gain, up 3.1 percent to 4,630.74.
Aristocrat Technologies (ALL) reported a stock price of AU$6.41, up 9.8 per cent, and contributed 2.04 points. Scientific Games Corporation (SGMS) contributed 0.68 points due to a 9.3 per cent gain in stock price to $11.77.
With a stock price of $13.31, up 8.3 per cent, Daktronics (DAKT) contributed 0.35 points. GTECH S.p.A. (GTK) contributed negative 0.93 points due to a 1.3 per cent decline in stock price to EUR 18.57.Due to a stock price of $16.39 (2.9 per cent), International Game Technology (IGT) contributed negative 0.84 points.
In July, Scientific Games Corporation (SGMS) announced a deal to acquire Bally Technologies (BYI) for $5.1bn. Scientific Games recently announced that it raised $2bn for the transaction and indicated the acquisition remains on track to close by the end of the calendar year. Shareholders for Bally Technologies are scheduled to vote on the transaction on November 18. The acquisition is also subject to the necessary regulatory approvals.
Both companies (BYI and SGMS) recently announced their financial results for the three months ending September 2014. Bally Technologies reported revenue of $320.8m in its fiscal first quarter of 2015, which represents an increase of 28.7 percent compared to the prior year. Electronic gaming machines revenue increased 32.1 per cent to $94.2m, partially due to an increase in sales in Australia and a nine per cent increase in average selling price to $17,767. Gaming operations revenue for Bally Technologies also increased during the quarter, rising 4.5 per cent to $106.5m, while systems revenue declined 2.4 percent to $74.3m. Bally Technologies also reported $45.8m in table products revenue, attributable to the addition of SHFL Entertainment.
Scientific Games Corporation reported revenue of $415.6m during its fiscal third quarter of 2014, up from $234.4m a year ago. The latest gains are attributable to the addition of WMS as well as an increase in lottery revenue. During the quarter, gaming segment revenue increased from $39.4mto $202.9m, primarily due to $162.5m in revenue from WMS. Instant products revenue increased 0.9 per cent to $134m, due to a 3.2-percent gain in product sales and a 0.8-percent gain in instant games revenue. In addition, lottery systems revenue increased to $78.7m, due to a $16.9m increase in product sales revenue. The latest annual gains are due to a rise in terminal and software sales to international customers and hardware sales in the US.
In other acquisition news, Aristocrat Technologies (ALL) recently completed its acquisition of Video Gaming Technologies, Inc. (VGT). Aristocrat purchased VGT for $1.3bn. Due to VGT’s installed base of 20,200 machines in the United States, Aristocrat’s installed base in North America will increase from 8,200 units to 28,400 units as a result of the acquisition.
Global Cash Access (GCA) also recently announced plans to acquire Multimedia Games (MGAM). The deal is valued at roughly $1.2bn and is expected to close in early 2015, assuming it receives the necessary regulatory approvals. Multimedia Games recently completed its acquisition of PokerTek, Inc. for $13.5m.
Consolidation in the global gaming supplier industry has been prominent in the past year as the industry and technology continue to evolve.