Multimedia Games Trips on Weak Guidance

Multimedia Games ( MGAM) announced second-quarter earnings that beat Wall Street expectations, but guided lower for the remainder of the fiscal year.

Multimedia Games reported second-quarter net income of $8.5 million, or 28 cents a share, up 7% from the year-ago $7.9 million, or 28 cents a share. The company's results topped Wall Street expectations of a 26-cent profit.

Revenue came in at $39.6 million, up 37.8% from the year-ago $28.7 million, driven by the expansion of slot machines, especially in Washington state. Expenses came in at $25.9 million, up 62% from the year-ago $16 million, fueled by a big increase in both selling, general and administrative expenses and the cost of player terminals.

Going forward, Multimedia Games said that 2004 EPS would come in near $1.29 a share, lower than the current Wall Street estimate of $1.33 a share, because a planned expansion of gaming at New York State racetracks will be delayed until the end of the company's fiscal year, which ends in September. In the third quarter, the company said that EPS would come in at 34 cents a share, lower than the current estimate of 38 cents a share.

"Several of the New York Lottery's racino racing and casino gaming facilities are still experiencing construction and licensing delays which are beyond our control and which contributed to the delayed completion of the initial deployment of player terminals linked to Multimedia's central determinant system," said Clifton Lind, president and CEO.

Ahead of the earnings release, shares of Multimedia Games fell 78 cents, or 3.4%, to $22.15. In after hours trading, shares extended their slide, dropping another 75 cents, or 3.4%, to $21.40.

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