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Takeaway: Solid pricing better than expected

Despite investor fears, ASPs remain stable

Investor concerns surrounding pricing pressure have weighed on the equipment stocks.  At least for the for-sale slot market we can confirm our suspicion that pricing held steady through Q2.  Following Aristocrat’s report today and combined with the other three large public suppliers (the public 4), the data indicates that ASPs actually increased in 1H2012.

On an as-reported basis, pricing for 1H12 increased 1.3% YoY.  Based on our estimates, 1Q pricing was up 2.0% YoY and 2Q pricing was up 0.3% YoY.

One of the factors that dragged down pricing in 1H12 was a higher than normal level of used unit sales.  IGT’s NA product sales included 1,700 used unit sales in the June quarter versus a normal quarterly run rate of 500.  Aristocrat also blamed an elevated number of refurbished units in their mix as a culprit for lower pricing.  If we assume that the used/refurbished units are priced at $8,000 and factor out the used units in 1H12 and 1H11 (500/Q for IGT), then ASPs for the public 4 look like they increased by 3.2% YoY.  Based on our estimates, 1Q and 2Q pricing was up 2.3% and 3.7% YoY, respectively.

SLOTS:  SURPRISINGLY STABLE PRICING - 1