Coincidence that slot suppliers post market share gains in their fiscal 4th quarter?
Two of the big 3 slot suppliers—WMS and BYI—will be reporting their fiscal year-end quarterly earnings in the next couple of weeks (IGT’s fiscal-year end is in September). Funny how the slot suppliers seem to produce market share gains in their fiscal year-end quarters (FEQs).
As the chart below shows, slot suppliers generally post sequential increases in units sold and market share gains in FQ4 followed by declines in the next quarter (FQ1). WMS and BYI generated increases of 10% and 23% QoQ on average, respectively in the FEQ. In terms of ship share, WMS and BYI both on average gained share QoQ in the FEQ. Interestingly, Konami is the most striking example as its FEQ units sold ballooned on average 31% relative to the previous quarter and its ship share is 5% higher QoQ in the FEQ. We also see a large drop in share in the quarter subsequent to FEQ for all slot suppliers and a drop in volume for all suppliers except IGT.
So what’s the deal? There seems to be some speculation that WMS was aggressive in June with discounting to try and make the quarter. We actually think it’s more likely that their sales force – every supplier’s sales force for that matter – pushed slots out the door to make their own quota. We are doubtful that Scott Schweinfurth would be pushing discounts to make EPS, especially given how low sentiment and expectations are currently for the group, and particularly WMS.
Keep the FEQ phenomenon in mind next time analysts/investors get excited about quarterly market share shifts.