Bally Technologies Inc.BYI

Morningstar Rating

Stock Research and Analysis

by Bradley Meeks

Bally Technologies has shown it can bounce back. We believe this narrow-moat firm can continue its recent success and remain a contender in the highly competitive slot manufacturing industry as it continues to focus on creating innovative products.

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Bulls Say

In 2007, Bally celebrated its 75th anniversary, proving its longevity in a competitive industry and the ability to create innovative products over time.

The company has a great deal of operating leverage, which can amplify operating margins and profitability if the turnaround continues.

Bally has a great reputation with Native American casinos, which are expanding in areas such as Florida and California. Slot machine sales to these regions can help spur further growth.

Bally has a product development center located in India. Continued use of the India development team could save the company 25 million a year in product-innovation costs. Read more

Bears Say

If market leader IGT's or competitor WMS Industries' WMS server-based products gain more acceptance from operators, Bally's growth in market share could become stagnant.

Bally operates in a litigious industry. Several lawsuits pertaining to patent infringement with IGT are pending and could derail future profitability.

Bally typically employs a fixed daily rental fee on its participation-based slot machines. In good times, the company will not enjoy any upside revenue potential with increased wagers--unlike competitor IGT. Read more

Strategy

The company plans to expand internationally via markets such as South Africa, Eastern Europe, Macau, and Australia. Bally's retooled product lines and system innovation should also spur future growth. Read more

Management

Richard Haddrill became president and CEO of Bally Technologies on Oct. 1, 2004. Haddrill has served on Bally's board of directors since April 2003 and previously served for five years as CEO of Manhattan Associates. Chairman David Robbins has led the Read more

Profile

Bally Technologies designs, manufactures, distributes, and operates gaming machines and computerized monitoring systems for casinos. Bally's primary technologies include Read more

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