Las Vegas Review-Journal - Inside Gaming

Investors remain somewhat unsure about International Game Technology’s $500 million acquisition of an online social gaming company, said one Wall Street analyst.

However, Stifel Nicolaus Capital Markets gaming analyst Steven Wieczynski said IGT is much better positioned than its competitors to ride out any further declines in slot machine sales by American casino operators.

Wieczynski recently hosted a series of investor meetings with IGT management. In a research note, he recounted that IGT “doesn’t paint a rosy picture for the domestic replacement cycle or have unrealistic views there will be a massive uptick in operator slot spending in the near-term.”

Still, Wieczynski said the company, which has corporate headquarters in Las Vegas and its manufacturing base in Reno, has taken the necessary steps to right size the business.

“In the end, given IGT’s dominant North American market share, improving international presence and attractive complimentary interactive opportunities, we believe the company remains well positioned to outperform its manufacturer counterparts, particularly if North American replacement demand sluggishness persists,” Wieczynski said.

The meetings came shortly after IGT said it was acquiring Double Down Interactive, which is the developer of Facebook's Double Down Casino.

“(The) announcement … is being viewed skeptically from the majority of the investment community,” Wieczynski said. “We continue to believe investor sentiment on the name is lukewarm at best with few expecting upside surprises throughout 2012.”

Several factors, however, including game content, lead Wieczynski to believe IGT “should be able to command a greater share of operators’ capital budgets in the quarters ahead.”