Our FREE Investing Newsletter
    Get Exclusive Summer Sale Discounts

    By joining our email marketing list you agree to receive marketing emails from Hedgeye. You may unsubscribe at any time by clicking the unsubscribe link in one of the emails. All Hedgeye products and services are subject to Hedgeye’s Terms of Service available at www.hedgeye.com/terms_of_service


Below are our notes from the business update.  We will follow up with a more detailed note shortly.


  • Agreement to sell Rainbow will allow them to concentrate on their core business – no surprise since this has been rumored in a while
  • Reluctance of customers
  • Low win per day in gaming operations seems to be bouncing back – claim it was weather related
  • Alabama negatively impacting them by 2-3 cents per quarter
  • Italy placements will begin in latter half of 2010.  BYI expects to play a meaningful role on both the games and systems side. Expects to place over 3,000 games and get several systems contracts
  • Releasing Alpha 2 with a 10 times improvement in processing power over Alpha 1. 
  • Digital Towers – great – 900 Powerballs and have commitments for 1300 slot products for their wheel products. 
  • Continue to take share on the systems business.
  • Canada RFP’s represent a big opportunity for them as do other new markets


  • No difference between big operators and small ones on the replacement side
  • G2E meetings were very positive, but the orders just didn’t come – which was surprising based on the feedback from G2E.  Thinks part of this is due to weather and weak performance in Jan & Feb.  Their numbers in game operations bounced back in March and hopes that implies an uptick in operators results
  • Write-offs in Alabama? Not yet, hoping that they will have more clarity in the next few days there.
  • Rainbow – in discontinued operations? 10-11 cents a share from loss of Rainbow. But if they use the proceeds then it’s neutral from an accretion/ dilution standpoint.  Tax basis on Rainbow? Estimate net proceeds of around $60MM (+/- $5MM)
  • Credit Facility Amendment?  Gives them more market pricing and more flexibility to use their balance sheet – old deal was done in the a rough time in the market
  • Still think that their market share is still in their 20% range +/- several percent
  • Think that they can get about 500 cash spins out until the end of June. Alpha 2 platform not out until Sept 2010.  Those 500 are included in the 1,300 wheel number.
  • Fireballs are replacing their products, while Cash Spin is helping them gain incremental floor share (50% or less cannibalization). 
  • Systems business lead time – is that getting shorter or longer?
    • Well shorter since it has shifted more to maintenance products from new openings
    • But its taking customers longer to make decisions
    • Guidance they are giving for the balance of this year is mostly for business in the bag – but there could be some slippage for openings.  However for next year – when they give guidance, a lot of it will be based on upgrade assumptions.