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Multimedia Games Inc. Suffers Fourth Quarter Profit Loss

On Thursday, December 14, 2006, well-known video lottery and bingo machine manufacturer Multimedia Games Inc., reported that the company's revenues have decreased to about 96% during the 4th quarter. One of the main reasons for this significant decline is Multimedia Games Inc.'s switch to newer gaming machines. For about 3 months since September 30, 2006, Multimedia Games' revenues have fallen to about $112,000 or a break-even per-share from about $2.9 million or an equivalent of $0.10 per share during the same period in 2005.

Multimedia Games' profits have dropped by about 12% or $32.5 million from $36.9 million last year at the same period. The results just missed the mark of Wall Street's forecast of about $33.2 million in total company profits. Multimedia claims that the downgrade in their sales is due to a 5% lower average of hold per day during the 4th quarter and a lower number of player stations that were installed compared to last year's figures.

They also define their hold per day as the total number the users have bet, which is less than the total amount that paid to them for their winnings and the amounts retained by the establishments for their share of the total profit. The profit from Class II games, which includes some of the older gaming machines, lost most of its value, which has dropped about 26% to approximately $19.7 million from their value of $26.7 million. According to Clifton E. Lind, President and CEO of Multimedia, the changing environment in the economic landscape of Oklahoma continued to have an economic impact on the fiscal 2006 operating results of the company.

They are also taking steps to address their operators' needs for single-touch, standalone gaming devices. In addition, Lind stated that Multimedia Games has changed about 13% of their machines to newer ones in Oklahoma, but they still remain at a disadvantage because some operators in the industry have changed theirs from non-standard sequence, interactive bingo games.

Lind further stated that the company's operations in Mexico have not taken off as originally expected. Their revenue decreased about 5% to $145.1 million from $153.2 million in 2005. For the 1st quarter of the fiscal year 2007, Multimedia Games claim that they are expecting to post a loss of about $0.10 per company share as a result of a much lower hold per day cost for the Class II Bingo Games of Multimedia.


Wednesday, February 14, 2007
Karen Jacobs

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