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Their goal is lofty but when will investors start to buy it?

Investors have heard the pitch before.  IGT will double its 15% international share to 30%.  The international market is bigger than North America and growing twice as fast or high single digits.  The question is will and when will investors believe it.

The upside is compelling.  We calculate $0.30-0.45 (33-50% above TTM EPS) of additional EPS if IGT is successful.  We remain skeptical of such a big leap in market share and acknowledge it will take time even if it does happen.  That doesn’t mean we’re not bullish, however.  We do believe IGT will continue to grow its international share off the 15% base.  Even a move up to 20% share in a fast growing and large market would provide excellent growth.

Ultimately, IGT must show near-term improvement to provide investors with the visibility they need to begin to put pencil to paper.  Whether it’s 20%, 25%, or 30% share, all scenarios provide meaningful growth.  IGT, show us the money!  That could happen as soon as FQ2 (March) where we are projecting 6% YoY growth in international product revenues and 9% QoQ.  There could be upside to our numbers.

The good news for investors is that there seems to be a lot of long-term leverage in the international business.  The sales and product cost infrastructure to attain management’s goal has been laid.  That is, a lot of the increase in fixed costs is already hitting the P&L.  Now, IGT needs to deliver the top line.