Analyst: Scientific Games Faces Bigger Sales Drop

NEW YORK (AP) — Scientific Games Corp. will likely have a bigger revenue decline this year than initially expected, a JPMorgan analyst said Tuesday as he cut some of the casino equipment maker's earnings estimates.

Carlo Santarelli said in a client note that the New York-based company's results will be weighed down by a stronger dollar as well as softness in some of its U.S. markets and the British pubs.

Like other casino equipment companies, Scientific Games' performance has been hindered by casino operators who are scaling back on equipment purchases and replacements as they look to control costs during the recession.

Santarelli anticipates a slower ramp up of the company's own cost control measures, and predicts such efforts will be unlikely to give a boost to business until later this year.

"We think Scientific Games is a second half of 2009 execution story and as such, we remain on the sidelines at present," the analyst wrote.

Santarelli maintained a "Neutral" rating and $11 price target. He slashed his first-quarter profit forecast in half, to 10 cents per share. The analyst also lowered his full-year estimate to 80 cents per share from 94 cents per share and cut his 2010 forecast to $1.08 per share from $1.13 per share.