he company’s stock slipped us$ 2.38, or 9.8 %, to us$ 22.02 in morning trading as the broader market fell on government data that said the economy shrank at its fastest pace in nearly 27 years during the fourth quarter.
The slot machine maker reported earnings grew to us$ 23.7 million, compared with us$16 million in the prior year. Analysts surveyed by Thomson Reuters forecast net income of 36 cents per share. Analysts’ estimates typically exclude one-time items. Quarterly results included a 5 cents-per-share gain related to a trademark lawsuit settlement.
Revenue increased 12 % to us$ 178.4 million from us$ 159.2 million for the period ended December 31. The results surpassed Wall Street’s estimate of us$ 175.4 million.
Revenue from product sales improved to us$ 115 million from us$ 104.7 million, while gaming operations revenue rose to us$ 63.4 million from us$54.5 million. Global new unit shipments climbed 6 % to 7,518 units, while average selling price increased 8 % to us$ 13,686.
WMS also maintained its forecast for fiscal 2009 revenue in a range of us$ 712 million to us$ 728 million. It provided a third-quarter outlook for sales of us$ 178 million to us$ 185 million. Analysts expect 2009 revenue of us$ 718.1 million and third-quarter sales of us$ 189 million.
“This was a positive quarter for WMS as the company continues to be able to offset a slow domestic replacement cycle by producing top-notch game content," Goldman Sachs’ Steven Kent wrote in a note to clients.
Kent anticipates WMS’s quarterly performance will benefit other slot companies as the results "show that while there is certainly a cautious environment regarding slot purchases, casinos are still spending some money." He reaffirmed a "Neutral" rating.
Robert LaFleur of Susquehanna Financial Group was also pleased with WMS’s results, given the industry’s current struggles. The casino industry has been squeezed as consumers curb discretionary spending due to the prolonged housing downturn, rising food costs, eroding credit and unemployment concerns.
LaFleur noted that the company’s participation games continue to play well even though casino operators are increasingly investing less in their slot floors and fewer new casinos are opening.
"While the overall industry outlook for the equipment business is bleak, the company’s innovative gaming offerings continue to receive strong customer acceptance, which has translated into higher win per days and increased ship share," LaFleur said in a client note.
The analyst lifted his price target to us$ 29 from us$ 24 and reiterated a "Positive" rating.