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Key takeaways from IGT’s FQ1 (2 positives/2 negatives):

1. I calculate operating EPS of $0.22 which is below the Street at $0.26
2. Margins were well below expectations but looks like a “kitchen sink” quarter
3. Domestic unit sales were in-line but pricing was strong
4. Play levels on revenue sharing games was surprisingly high
5. International sales were awful

Management will likely lower guidance on the call at 9am. That is certainly the consensus view. Our view on 1H CY 2009 industry slot sales is very negative. At least for IGT, since most analysts are negative, projections, while high, are not that far off.

If were IGT I would have done the same thing this quarter. Take the charges, sacrifice near-term margins, and lower expectations. Management appears to be setting the stage for better future results. The stock is deathly cheap. Confidence needs to be restored for IGT to work. This quarter may be the first step in that process. When it does, IGT will move and move fast. Keep an eye on this one.