GGRAsia – Sci Games to grab share on new op system: analyst

Sci Games to grab share on new op system: analyst

Sep 23, 2015 Newsdesk Latest News, Top of the deck, World

Scientific Games Corp is “poised to capture market share next year driven by the introduction of its ArgOS platform,” said a note from David Bain, an analyst at brokerage Sterne Agee CRT.

U.S.-based Scientific Games stated in a press release on September 14 – previewing its stand at the Global Gaming Expo (G2E) casino industry trade show which begins in Las Vegas on September 29 – that the ArgOS operating system for its electronic gaming machines combines the best technology from its Bally and WMS product brands.

“We believe Scientific Games worked to take the best ideas and technology from the two companies’ most recent platform developments, upgrading graphics and sound, and adding true 3-D and TV technology,” wrote Mr Bain, adding, “historically, major platform and cabinet introductions increase sales volumes and average selling prices more so than a vast majority of game theme/skin introductions”.

Telsey Advisory Group said in a note in early August that Scientific Games’ development of a common software and operating system for the various casino gaming machine brands it has acquired since 2013 was likely to be welcomed by investors.

Mr Bain of Sterne Agee CRT suggested in his Monday note that Scientific Games “should meet or exceed” market consensus estimates for third quarter and fourth quarter earnings before interest, taxation, depreciation and amortisation, “just from executing its cost synergy goals”.

He said: “Versus 2Q15 results, we believe 3Q15/4Q15 costs savings should be approximately US$7.9 million to US$11.5 million.” Mr Bain further noted: “Scientific Games has targeted an additional US$54 million of annualised cost synergies by the end of calendar year 2015 from the end of 2Q15.”

Scientific Games posted a 66-percent year-on-year jump in second quarter revenue to US$691.5 million, the company announced in August. Its net loss however widened to US$102.2 million from US$72.4 million, affected, it said, by costs and charges related to the acquisition and integration of gaming equipment makers Bally Technologies Inc and WMS Industries Inc.

Gavin Isaacs, president and chief executive of Scientific Games, stated in a letter to customers on September 15 that the business had experienced some “hiccups” in consolidating its portfolio of businesses.

“During the integration we had some hiccups. For those of you who were impacted, we are working to address and resolve those issues quickly. Please accept my personal apology and know that our commitment to exceeding your expectations has not wavered,” said the CEO.

Scientific Games, initially a lottery equipment and management provider, purchased top-four U.S. slot supplier WMS for US$1.5 billion in 2013. Also in that year, slot machine and casino floor management system supplier Bally Technologies acquired casino electronic tables games and electronic shuffler specialist SHFL Entertainment Inc, known by the brand name Shuffle Master, for US$1.3 billion. In November 2014, Bally – along with Shuffle Master’s brands – was absorbed into Scientific Games in a deal valued at US$5.1 billion.

Mr Isaacs said in his open letter that the majority of the integration process had now been completed, “including our consolidation of gaming manufacturing in Las Vegas, the cross-training of our gaming sales teams, and the establishment of our global corporate headquarters in Las Vegas”.