Over the past three years, Bali Technologies has created a Rodney Dangerfield version of its gaming equipment division due to weak earnings, lower slot machine sales and a tumble in its stock price.
The Las Vegas-based slot machine maker has not received “respect” from Wall Street in any attempt.
Now Bali Technologies is once again loved by game analysts and investors. The company is considered to be poised to emerge from the financial downturn and dominate a portion of the global slot machine market. It is estimated to hold a high share of 60 percent. The company is dominated by gaming giant International Game Technology.
According to a recent annual survey of the slot machine industry conducted by Goldman Sachs Investment Corp., casino slot floor managers generally view Bali’s new gaming machines as some of the better products coming to market. Recent sales announcements for the company’s system technology, which provides accounting and bonus features for casinos, have boosted revenue.
Bali Technologies has also recently completed a nearly two-year effort to restate the company’s earnings since 2005. The company’s net loss rose 카지노사이트 순위 between 2005 and 2006, but revenue rose more than 11% over the same period, a trend that Bali executives predict will continue in the current financial year.
Meanwhile, investors are roosting as shares in Bali, which remained below $10 a share nearly two years ago, have risen back to the $20 a share level since mid-February.
At a disadvantage, Bali Technologies and IGT are pending nearly a dozen federal anti-trust lawsuits that have sued and fought back against each other over patent infringement claims. It is also at least 18 months to two years away from a new replacement cycle in which casinos across the country are expected to replace old slot machines with new games.
Nevertheless, game analysts are again praising Bali.
“After years of trouble, Bali appears to be reemerging as a better range of products to meet the needs of mechanical and video spinning reels,” Goldman Sachs gaming analyst Stephen Kent said in the company’s seventh annual slot survey released in early March.
“Management has done a great job of getting the company back on track,” Kent said. “We note that Bali is still behind in filing financial reports because of accounting issues from nearly two years ago. But putting those issues aside, Bali appears to have momentum for the next year, which could help close the gap into the next replacement cycle.”
Nolenberger Capital Partners gaming analyst David Barteld recently upgraded the rating on Barley’s stock to buy from neutral, saying Barley brought a new product to the casino faster than previously expected.
“With successful management and operational restructuring, valuation metrics for Bali’s stock are likely to return to more normalized levels,” Barteld said in a note to investors. “Management acknowledges that profitability levels remain below historic levels, but improvements are being made and we have successfully deployed new games much faster than expected in the company’s turnaround efforts.”
Joel Simkins, a game analyst at Prudential Equity Group who doesn’t officially address Bali Technologies but recently met with management, was also impressed by the progress the slot maker has made over the past few years.
Shimkins said casino operators praised Bali’s game and showed willingness to pay extra for the machine.
“Rather than discounting products as they have in the past, (Bally Technologies) has been raising prices and (the company) is focusing on taking the cost out of the manufacturing process as the game performs well and the volume picks up again,” Simkins said.
Analysts and clients’ comments lift the spirits of Bali Technologies CEO Richard Haddryl, who has spent most of his tenure mitigating concerns and dire predictions about the company’s future.
Haddrill, who led gaming equipment maker Powerhouse Technologies for three years before Anchor Gaming took over in 1999, joined Bally’s board in 2003, when the company was known as Alliance Gaming.
He became CEO in a year and the company was in transition. In 2004, Alliance sold Slot Machine Route Operations, a casino in Sparks, and bought the Reno-based systems and technology business.
Last year, the company changed its name to Bally Technologies. The move reflected the company’s original name from the 1970s, its reliance on technology-intensive systems sectors, and hopes that the new title would wash away financial problems related to the Alliance.
“Our clients have been saying good things to the investment community before they even talked to analysts,” Haddrill said. “We’re seeing tremendous opportunities to increase our market share in terms of gaming and systems, with so many new products on the market right now. Our revenue has increased tremendously and that’s a trend we continue to see.”
Bali Technologies said it had $483.1 million in sales in 2005 and $547.1 million in 2006. Harddrill predicted that the company’s revenue would exceed $670 million in 2007.
However, finances are not always so positive.
During his tenure, Haddrill worked with three other chief financial officers, announced the company needed to restate two years’ worth of earnings, and saw the company’s stock price head south. Some investors will not reinvest until all of the company’s financial reports are submitted to the U.S. Securities and Exchange Commission, he said.
Haddrill also had to deflect rumors that the company was about to be sold. Many gaming analysts predicted that consolidation in some form would affect the manufacturing side of the gaming industry. In February, Wall Street reported that Bali Technologies was merging with rival slot manufacturer Avolistat Technologies, but they quickly fell through.
“It’s a distraction, but it’s become part of the business,” Harddrill said of the acquisition rumours. “I think the conversation is more intense because private equity has gone into gaming. Private equity has made it more of a buzz, but manufacturers are not real estate games.”
Haddrill and Game Analysts Think The Company’s Slot Machine Is Turned Around.