Lone dissident added to IGT board; SHFL profit falls in first quarter

TAGs: IGT, international game technology, jason ader, Patti Hart, shfl entertainment

igt-board-vote-shfl-profitTuesday’s much-ballyhooed proxy fight showdown at gaming device maker International Game Technology (IGT) has resulted in partial victory for dissident shareholders. Seven of IGT’s current board members were re-elected on Tuesday but board member David Roberson has been booted in favor of Daniel Silvers, the president of Ader Investment Management (AIM).

Jason Ader, the head of AIM and holder of 3% of IGT’s outstanding shares, had been pushing for three board seats after expressing little confidence in the strategy pursued by IGT CEO Patti Hart (pictured looking relieved at right) to diversify the company by investing in online gambling and social gaming operations, including the $500m purchase of social gaming outfit DoubleDown.

Despite failing to win board seats for two other Ader nominees, including former CEO Charles Mathewson, Ader nonetheless declared the vote “a victory for all IGT shareholders” who had “clearly communicated the need for positive change at IGT.” Hart, who also won re-election on Tuesday, said the proxy fight had “tested my convictions and the convictions of the board,” but maintained that “we have always had tremendous convictions in what we were doing.” Hart said the board would “welcome the advice and counsel” of Ader’s man Silvers. IGT chairman Phil Satre said he hoped the company could “put the last few months behind us” but Ader told Bloomberg that he planned on “keeping the pressure on management and seeking additional seats next year” in a bid to “improve IGT’s discipline in corporate governance and capital allocation.”

IGT competitor SHFL Entertainment posted its fiscal first quarter numbers on Monday, reporting an 8% drop in profit to $7.1m. However, after adjusting for $2m in online patent infringement settlement fees received in the same period last year, net income actually rose 11%. Revenues were up 5% to a record $58.8m (up 9% after adjustments) but expenses rose nearly 10% to $49.2m. Broken down by segment, total utility revenue rose 29% to $25.3m and proprietary table games revenue rose 12% to $12.8m. On the negative side, electronic table systems revenue fell 14% to $7.1m and electronic gaming machines (EGM) revenue fell 8%.

Looking forward, SHFL hopes the recent addition of Asian games developer Protec Games (to be redubbed SHFL China) will add a nice kick to its EGM business. SHFL CEO Michael Gavin Isaacs says the company is still on target for 12%-19% growth this year, with Australia tipped as the company’s major market for slots in 2013. Isaacs told analysts SHFL is also eagerly anticipating getting its feet wet in New Jersey’s online gambling market, as “no online casino offering is complete without our leading proprietary table games.” However, Isaacs doesn’t believe either New Jersey or Delaware’s online casino offerings will be actually taking wagers until 2014. As for SHFL’s European deals with GameAccount Network and Amaya Gaming, “we’re pretty much on target and anticipate late Q2, early Q3 for our revenue there.” Isaacs said the company anticipates that its igaming initiative will break even this year.


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