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In our 4/21/09 note "IGT: PLENTY OF EARNINGS POWER FOR PATIENT INVESTORS", we highlighted recurring earnings power of $1.40-$1.50 assuming normalized replacement demand of 35,000 machines annually. 

Since that analysis, we've also reached the conclusion that pent up demand, especially for Reel Spinners, could lead to a V-shaped recovery, much to the benefit of IGT.  Assuming 38% of the 950,000 slot machines in North America are Reel Spinners and they are replaced in an accelerated cycle over three years, IGT could sell almost 60,000 Reel Spinners annually with a 60% share.  Throw in another 15,000 Video Reels (33% share) and IGT would be selling 75,000 machines annually over a three year V-shaped recovery scenario.  Per my complex math, 75,000 is a lot more than normalized 35,000, which is a lot more than our 2010 projection of 15,500.

IGT: A TALL PEAK OF EARNINGS  - IGT NA REPLACEMENT DEMAND

At 75,000 replacements, IGT could generate north of $2 per share in EPS for a few years, more than double our 2010 estimate of $0.94.  Not bad for a $15 stock.