After the bell, shares had slid 8.8% to $13.55.
The company, which specializes in the design and manufacture of casino gaming machines, said in a statement that it was "taking actions to realign its cost structure for long-earnings growth."
IGT said one of its cost-cutting measures included reducing its 5,000-strong workforce by 7%, enabling cost savings of $30 million over fiscal 2014 and $50 million on an annual run-rate basis.
The Las Vegas-based business also cut its fiscal 2014 earnings guidance to between $1 and $1.10 a share from previous guidance of $1.28 to $1.38 a share. Analysts surveyed by Thomson Reuters had forecast net income of $1.20 a share.
For its March-ending second quarter, management provided earnings guidance of 17 cents to 19 cents a share. Analysts expected 29 cents a share.
"As we reach the halfway point in our fiscal year, you can see this is a challenging time for the industry and IGT. We knew that our success in 2013 would be difficult to replicate," said IGT CEO Patti Hart in a statement. "However, we did not expect such a sharp decline in North American gross gaming revenues, or further degradation in the international currency, compliance, and importation environment."
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TheStreet Ratings team rates INTL GAME TECHNOLOGY as a Hold with a ratings score of C+. The team has this to say about their recommendation:
"We rate INTL GAME TECHNOLOGY (IGT) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and reasonable valuation levels. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, weak operating cash flow and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- IGT's revenue growth has slightly outpaced the industry average of 3.4%. Since the same quarter one year prior, revenues slightly increased by 3.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- INTL GAME TECHNOLOGY has improved earnings per share by 29.2% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, INTL GAME TECHNOLOGY increased its bottom line by earning $1.02 versus $0.87 in the prior year. This year, the market expects an improvement in earnings ($1.21 versus $1.02).
- The gross profit margin for INTL GAME TECHNOLOGY is rather high; currently it is at 63.64%. Regardless of IGT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, IGT's net profit margin of 14.63% compares favorably to the industry average.
- IGT has underperformed the S&P 500 Index, declining 12.53% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- Currently the debt-to-equity ratio of 1.98 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with the unfavorable debt-to-equity ratio, IGT maintains a poor quick ratio of 0.84, which illustrates the inability to avoid short-term cash problems.
- You can view the full analysis from the report here: IGT Ratings Report