For a stock that many had assumed would be a highly speculative bet, slot-machine maker International Game Technology has emerged as a pillar of steady, robust growth since the late 1980s. The stock has risen from 10 a share early last year to 33 3/4 on May 11 and has given the shorts nothing but the heebie-jeebies. They have been forecasting a big fall for IGT, and now they may have to suffer more sleepless nights, since the company seems destined to hit more jackpots.
The next one will come on May 20, when IGT will unveil its new blackjack "jackpot" gaming system called Progressive 21 in Atlantic City. For the first time, blackjack players will get a chance to win large jackpot prizes for a $1 wager. The new game is played on a custom-designed table with a special "chip acceptor" next to the regular betting area. IGT will link 74 jackpot tables in nine casinos. A player can plunk down $1 to participate in Progressive 21 while playing ordinary blackjack with the same cards. The player wins $2 when one of the first two cards dealt is a five. Two fives of the same suit wins $50. Four fives of the same suit gets you to the grand prize of $200,000, and the pot can rise to more than $1 million if there are no big winners for a long time.
Progressive 21 will be IGT's "next big draw and bottom-line winner similar to IGT's Megabucks system that helped propel the company's profits to great heights," says Chairman and CEO Chuck Mathewson.
Veteran entertainment and gaming analyst Steve Eisenberg at Oppenheimer & Co. says IGT's leading industry position has been "further augmented by its recent entry into Japan," which approved IGT's bid to make Pachisuro devices--the Japanese wall-mounted version of reel-spinning slot machines.
ON THE RIVERBOAT. Japan will be a big market, but it's only one of the rich markets IGT will be breaking into, says Eisenberg. He notes that much potential lies in other parts of the Far East and South America.
Based on IGT's break into Japan, the analyst has raised his earnings estimate for the year ending Sept. 30, 1993, to 85 a share from his prior 79 . For fiscal 1994, the analyst sees $1.35. But he notes that he has yet to factor into his 1994-95 estimates the earnings expected from new IGT casino customers in Canada, Indiana, and Texas, as well as the riverboats in Chicago and video lotteries in Massachusetts. "With the company just at the beginning of a 40% annual growth, the upper 40s is within easy reach for this stock," Eisenberg says.