Shares of lottery and casino industry supplier International Game Technology (NYSE: IGT) jumped as much as 15.3% in trading Tuesday after reporting third-quarter earnings. At 10:45 a.m. EST shares were still up 13.8% on the day.
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Revenue fell 4% in the third quarter to $1.22 billion and operating loss exploded to $556 million, or $3.95 per share. The loss was driven by a $714 million charge to writedown the Gaming and Interactive unit to fair value. Adjusting for that loss, earnings were $0.40 per share.
Analysts were only expecting earnings of $0.24 per share on revenue of $1.16 billion, so the adjusted results easily topped the level investors were expecting.
The more notable development may have been that net debt declined 8% versus a year ago to $7.34 billion in the quarter. After a string of acquisitions, International Game Technology had built a level of debt that was likely unsustainable long term. Reducing debt will also reduce the risk the company faces if the economy and gaming industries decline in the next few years.
Given declining revenues and the huge writedown of acquired assets, I don't think IGT is a great buy after third-quarter results, but beating expectations is often enough to push a stock higher and that's what happened on Tuesday.
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