Gaming technology giant International Game Technology (NYSE:IGT) agreed last week to sell its IGT OnLine Entertainment Systems business to Scientific Games (NASDAQ:SGMS) for $143 million. That International Game Technology (IGT) investors hardly reacted in Friday's trading illustrates that IGT hasn't lost much in sticking to its core business.
The sale includes the systems and contracts IGT held to sell lottery tickets in a handful of states and the Caribbean, as well as systems sold overseas, unspecified intellectual property, and the exclusive license to certain IGT slot brands for use in its games.
All told, IGT OnLine has annual revenues of approximately $140 million -- not much compared to the company's $1.88 billion in sales for the fiscal year ended last September, though quite a lot to Scientific Games, which posted $455 million in sales in 2002.
The online lottery business wasn't in IGT's stable for long. Having acquired the business with its acquisition of Anchor Gaming last year, IGT was quick to usher it out of the casino. (We covered the deal when it was announced.) The company had eight U.S. state lottery contracts, among other businesses, but apparently didn't relish the idea of competing to grow this business or maintain the contracts it had.
Instead, IGT will focus on its bread-and-butter businesses of developing and making computerized gaming systems -- in short, slot machines -- wide-area progressive gaming systems, and equipment leasing.
With a leading position in its businesses -- No. 2 in game system manufacturing is WMS Industries (NYSE:WMS) -- and a history of strong cash flow, it's difficult to find fault in IGT's efforts to maintain focus.
For more gaming coverage, check out Jeff Hwang's detailed look at Harrah's (NYSE:HET) move to acquire Jack Binion's Horseshoe Gaming from under the nose of Ameristar Casinos (NASDAQ:ASCA).
Dave Marino-Nachison owns shares of WMS Industries. You can reach him at [email protected].
