Hart’s war; Cramer lurves Adelson; Penn’s good deed

As the clock ticks toward a shareholder fight over International Game Technology, CEO Patti Hart tried to rally her troops with a bit of good news. IGT has inked a pact to sell 1,375 VLTs to Saskatchewan, representing one-third of the VLT market in that province. Since Wall Street analysts had already incorporated this into their 2013 revenue model, it didn’t set off a big “Wow!” However, Manitoba is coming up on a 6,000-VLT replacement cycle. If IGT can capture at least 35% of that business, it would be worth another four cents of per-share earnings, according to one analyst. But if Hart is banking her presidency on the most recent earnings report, she can expect only mild enthusiasm from the Street. Carlo Santarelli of Deutsche Bank summarized the numbers as mostly “good” — as in the interactive segment — leavened by a couple of dashes of “not good.”

Arguing for a bullish outlook on IGT, Santarelli wrote, “management is executing on the controllable aspects of its core business ([it’s] tough to control play levels).” He did express “varying degrees of consternation” over things like “negligible” machine sales in Latin America but reiterated his “Buy” rating. J.P. Morgan‘s Joseph Greff stayed “Neutral,” having been disappointed by net revenues and product sales but pleasantly surprised by IGT’s profit margins. He’s “skeptical” that IGT will be able to repeat its 2013 performance (up 30% in the first quarter alone) next year, with nothing in the pipeline comparable to this year’s big shipments to Canada and Illinois. IGT outperformed Street expectations for cash flow and profitability, and was right on the button as regards operating profit. Since IGT is headed for a big spike in revenue and cash flow this year, that’s probably enough to save Hart’s job.

My boss defines this as a clash between the old ways and the new ones. The former would be represented by Jason Ader, putative leader of the dissident shareholders. He wants to get back to selling boxes, games and management systems. Hart, meanwhile, has staked a fortune on social gaming, Internet gambling and “cloud” technology. It could be that’s the right strategy but Hart is the wrong person to execute it. If that’s the case, however, I’ve yet to hear anyone say it publicly.

Anybody besides me remember when James Cramer trashed Las Vegas Sands stock as “crap” on national TV? (In Cramer’s defense, the share price was in the crapper at the time.) Time sure flies. Now Cramer’s people are lauding Sands, despite “sub par [sic] growth” in profits (a 13% margin). Well-above-average revenue growth (12%) has been eaten up somewhere on its way to the bottom line, undoubtedly devoured in the cause of servicing the company’s 20:1 debt-to-equity ratio. No wonder that billion-dollar Sands Bethlehem is being shopped around. At his presence pace, you wonder how spendaholic Sheldon Adelson will ever be able to borrow enough to cover his transoceanic ambitions.

A cheer for Penn National. Although it is usually the bad boy of the casino industry, Penn National Gaming earns an S&G shout-out for not simply barring timeshare fleas from M Resort but going one step further. Guests who are accosted by condo shills are actively encouraged to contact M’s security force. (One has visions of salesmen being forcibly escorted from the premises.) Good going, Penn!