Scientific Games Corporation
) recently announced the sale of around 39,742,179 Sportech plc
shares, generating gross cash proceeds of around GBP 27.8
million. The shares were sold in accordance with Regulation S of
the United States Securities Act of 1933 on Jan 14, 2014.
Scientific Games is expected to fund its expansion program
with the help of the proceeds from this stake sale. Moreover, the
company is expected to use the proceeds to increase investments
on product development, which will help it to remain competitive
over the long term.
The domestic lottery industry is undergoing a transition,
which involves increasing involvement of private vendors in state
lottery management, higher prize payouts and introduction of
tiered pricing for national jackpot games to add impetus to the
sagging U.S. lottery industry. We believe Scientific Games is
well positioned to benefit from this transition, going
However, these measures will take some time to generate
results. Intensifying competition from the likes of
International Game Technology
Bally Technologies Inc.
) coupled with sluggish macroeconomic condition in important
international markets are the primary headwinds for Scientific
Games, going forward.
Nevertheless, we believe that the company's diversified
product offerings, international development activities,
recurring revenue business model and strong growth from the
Internet-based business will drive the stock over the long
Moreover, Scientific Games' acquisition of WMS Industries will
likely diversify the former's product portfolio and expand its
global footprint. The deal also diversifies Scientific Games'
revenue stream from lottery-based products and cross sell WMS
Industries' interactive gaming products and casino-based
Currently, Scientific Games has a Zacks Rank #3 (Hold).
BALLY TECH INC (BYI): Free Stock Analysis
INTL GAME TECH (IGT): Free Stock Analysis
SCIENTIFIC GAME (SGMS): Free Stock Analysis
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