Our Gaming, Leisure and Lodging team recently spent some time in Las Vegas speaking with executives at various gaming companies and one name that impressed us is Bally Technologies (BYI). Keith bought the name in our Real-Time Alerts yesterday.
Bally has a nice product cycle ahead of it and the announcements they made at the G2E show this week were positives in our view. Their customers are providing incontrovertible feedback. Historically, BYI is a reel spinning slot supplier and now they’re making the move to video. Approximately 80% of units shipped in North America are video and unbeknownst to most investors, BYI’s recent video slot shipments have also been around 80% of its total. So their video content is already driving higher share recently, and this will likely increase their high teens overall share.
Things are going well for Bally’s stock right now and we’re in-line with the September quarter. Looking out at 2013, however, we believe estimates may be too low. Shipments to Illinois and Canada could help exceed expectations and push earnings higher.