TIME TO WAKE UP THIS THREAD!
Here is the article from Street Com's Herb Greenberg 16 Sept 1998;
Herb on TheStreet: Will WMS Get a
Monopoly on the Slot Machine
Business?By Herb Greenberg
Senior Columnist
9/16/98 8:41 AM ET
In the business of building slot machines, WMS Industries
(WMS:NYSE) has been the losing bet against International
Game Technology (IGT:NYSE) and Anchor Gaming
(SLOT:Nasdaq).
When its Midway Games (MWY:NYSE)
home-video-game unit was spun off earlier this year, most
investors opted for the spinoff rather than the so-called stub
known as WMS, which also makes video lottery games
and pinball machines. Midway had several hot games,
including Mortal Kombat. WMS, on the other hand, had
little visibility-especially in the potentially superhot casino
segment, where it had lost a crucial patent lawsuit brought
by IGT. As recently as two months ago its stock was
trading at 4.
But while Wall Street wasn't watching, WMS used the
downtime to retool itself and design around the patents.
Judging by its stock, which closed yesterday at 6 15/16, it
appears to be beating the odds. Several WMS slots
introduced this year have been hits. But none has generated
the buzz like WMS' new Monopoly game. Introduced just
six weeks ago, this "game within a game" has won rave
reviews. And based on early results, it may be the hottest
new slot since the joint introduction by IGT and Anchor
several years ago of Wheel of Fortune.
Bear Stearns analyst Jason Ader, who has no relationship with
WMS and isn't currently recommending its stock, interviewed
officials from 26 of the country's top casinos for a report
scheduled for release in conjunction with next week's World
Gaming Congress & Expo in Las Vegas. "Everyone's talking
about Monopoly," he says. He adds that so far, some casinos
expect Monopoly to do better than Wheel of Fortune and
several other recent winners. The various versions of the
Monopoly game works like any other slot that dispenses coins,
with one exception: After a number of plays the machine also
incorporates features, as a bonus, from the familiar Monopoly
board game. Like Wheel of Fortune did for IGT and Anchor,
however, the real attraction of Monopoly is that it has the power
to create an annuity of sorts for WMS. Rather than selling the
slots outright, at a price of around $6,500 apiece, the company
shares in the game's profits by receiving roughly 20% of the
take. The average slot grosses around $100 per day. It's hard to
say how Monopoly will eventually do. There are currently only
12 machines in four casinos. But early results lead David Ehlers,
chairman of Las Vegas Investment Advisors, to suggest that
Monopoly may do on average as much as $450 per day. That
would translate into $32,850 per year, or earnings per share of
42 cents per 1,000 machines. (This year WMS is expected to
earn 5 cents per share.) As a benchmark, consider that currently
there are roughly 6,000 Wheel of Fortunes installed. Even with a
portion of that, "It doesn't require an accountant, or an
investment analyst, to figure out that Monopoly may impact
WMS substantially," says Ehlers, who is just as likely to be short
gaming stocks. WMS is currently his favorite stock to own. The
gaming industry in general has been in the investment swamp
lately, due in large part to overcapacity in Las Vegas. But that
overcapacity should actually work in favor of WMS because
casinos will need to make sure they have a mix of the best
games. Ehlers doesn't expect earnings from Monopoly to really
start to kick in until the post-Christmas quarter. The obvious
question, however, is whether a game that gets off to such a fast
start can fizzle. The obvious answer: absolutely. "If customers
lose a lot of money on it you're going to die," says WMS Chief
Operating Officer Kevin Verner. To avoid such a fate, he says
Monopoly has high "hit frequencies" and frequent bonuses.
Ehlers, meanwhile, says his staff's own daily checks at the same
casinos at the same time every day show no letup in demand for
Monopoly. He says he checked his old notes and "there's every
bit as much enthusiasm" for Monopoly as there was for Wheel
of Fortune. "All machines are a gamble," says Ehlers of Las
Vegas Investment Advisors. "The ones that do the best are
those that can entertain you while you're losing money. And if
they can make you laugh, well, WMS is the first that has done
that." If Ehlers is right, WMS will be laughing all the way to the
bank. "
Now my Marth
$450.00 times 365 days per year= $164,250.00 per
machine/year
$164,250.00 times 6000 machines = $ 985,500,000.00 gross
$985,500,00.00 times 20 percent = $197,000,000.00 gross
profit
per year to WMS! Take a ride on the Reading children! Pass
GO and collect 200 dollars! Get out of jail free!
Call your friends and neighbors and tell them to jump on this one! |
