Except for a couple of small companies, Wall Street has thrown the towel to the slot machine manufacturers for this year. Without new hotel-casino openings and a market for replenishing slots according to analysts "nonexistent", the investment community has been advised to watch the gaming equipment sector with caution. Beware of INVESTMENT in Casino gaming equipment

Janney Capital Markets Game Analyst Brian McGill returned home from the South Summit of this month's game in Biloxi, Mississippi, with a bitter opinion from the Slot industry: Few sales occurred at the show. "Although we believe that investors generally realize that conditions are difficult, given recent earnings dividends, we expect materially to worsen before improving," McGill said in a note to investors.

Wells Fargo Securities Game Analyst Cameron McKnight said that slot machine makers faced a difficult first quarter and do not expect the trend to change.

During a gaming conference sponsored by Wells Fargo recently, leaders of gaming equipment companies told investors that casino operators are not spending money to replace older games. At best, replacement sales will remain unchanged throughout the year.

"The gaming equipment market is still very competitive because smaller players are winning (the market) per share," said McKnight.

Most of the analyst community agreed that Bally Technologies stands out among its peers. The company bought SHFL entertainment in a $ 1.3 billion acquisition that formed one of the most diverse manufacturers in the video game industry. Bally also reported decent earnings, increased earnings and revenues.

However, the consensus was the competitive environment against slot machine manufacturers competing for a handful of sales opportunities that changed Bally's leadership.

In addition, IGT wobbles. Earnings decreased 66 percent in the last quarter; and it comes from dismissing 7 percent of its global workforce; and it lowered its fiscal orientation. Sharks smell the blood in the water. "Unfortunately, we expect IGT to lose even more quota in the future," said McGill. "We believe that the company has a big problem with the lack of content right now."

That opinion can only help Bally. The Game Analyst of Stifel Nicolaus Capital Markets Steven Wieczynski, however, is concerned. He said that investors could make the slum industry's sentiment too negative could cloud Bally's competitive advantages, which include greater diversity thanks to the SHFL acquisition.

The biggest problem faced by slot machine manufacturers is the deteriorated game replacement market. McGill said the industry expects it to replace about 65,000 old slot machines with new games this year.

That figure is more likely to be less than 60,000. In addition, it was thought that IGT, Bally and WMS scientists with the ownership of Games would control up to 70 percent of the replacement market. McGill now sees it closer to 20 percent as his games lost all their charm.

Aristocrat Technologies based in Australia and Konami Gaming based in Japan have cut a slice of the "Big Three" business and could be responsible for up to 30 percent of total replacements.

"In a nutshell, there are many manufacturers competing to sell very few games," said McGill. "We had seen replacements very close to zero for this year, but we are increasingly concerned that they actually decrease exponentially year after year."

The other factor that begins to weigh on slots manufacturers is that operators want to eliminate "share" games - slot machines for manufacturers and casinos to share revenues - that move would also be affecting IGT, whose MegaJackpot games fall under the shared business model.

McGill said casino operators expressed a desire to reduce dependence on participation games, not only in regional markets, but also in Indian casinos. "IGT is the most leveraged in this segment," said McGill. "Given the competition in the space and the results of the generally disappointing SLOTS MACHINES in the main markets, we expected the company to lose Megajackpot games and replace them with the low performance games.”