The gambling business isn't all what it is cracked up to be.
Tabcorp is struggling, thanks to its own self-inflicted problems of poor management and cost controls, plus the impact of the horse flu problems in NSW. PBL is suffering from some scepticism about its gambling ambitions in the highly competitive Macau market, as well as concerns about the forthcoming split.
And yesterday poker machine maker, Aristocrat Leisure saw its shares tumble by almost $2 to $11.55 in the biggest fall in four years on an earnings downgrade. That's a new 52 week low for the stock.
The company said since net earnings would be $240.1 million for its 2007 financial year which ends on December 31, little changed from 2006's figure.
That saw the shares plunge to their lowest level since November 2003.
Coming on top of poor publicity from a class action in the Federal Court, it was a miserable day for the company.
Aristocrat said it continues to experience difficult overall market and regulatory conditions, with the short term outlook in Australia, North America and Japan, deteriorating throughout the second half.
"Based on preliminary, unaudited year-to-date management results and current trading momentum, the company expects profit after tax for the year ended 31 December 2007 to be broadly in line with the $240.1 million result for the prior corresponding period," Aristocrat said in a statement to the ASX.
"This outlook remains subject to a number of operational variables.
"At like-for-like exchange rates (in local currency terms), the underlying profit increase approximates 10 per cent."
Aristocrat also said it continued to be affected by the strong Australian dollar.
"The company's results also continue to be impacted by the strong Australian dollar which has appreciated a further five per cent against the US dollar since 30 June 2007, with the average rate over the second half estimated to be 15 per cent stronger than in the second half of 2006," the company said.
In that it's not alone, with AGL Energy hurt last week along with the likes of CSL and resources groups like Woodside and BHP Billiton.
In Australia, the company said market demand remained subdued, after the introduction of non-smoking legislation and delays in the approval and uptake of so-called ticket-in-ticket-out technology.
The replacement cycle in North America was still depressed with demand skewed towards stepper product and no new market expansion opportunities expected over the rest of 2007.
Aristocrat also declared an inaugural supplementary unfranked dividend of 10 cents a share, in line with its capital management plan announced in August.
