Elixir Gaming reports wider 2Q loss, shares drop

LAS VEGAS—Elixir Gaming Technologies Inc. reported a wider second-quarter loss on Wednesday and announced the resignation of its chief financial officer, driving the gambling equipment company's stock to an all-time low.

Shares of Elixir Gaming, which is focused on emerging gambling markets in the Asia Pacific region, dropped 36 cents, or 33.3 percent, to 72 cents in heavy afternoon trading, after touching a low of 67 cents earlier in the session.

Elixir reported that losses for the quarter ended June 30 widened to $9.6 million, or 8 cents per share, from $4.8 million, or 14 cents per share, a year ago. The weighted average share count totaled 115 million in the second quarter of 2008, compared with 35 million in the prior-year quarter.

Revenue gained 8 percent to $3.7 million, from $3.4 million in the second quarter of 2007.

"With gaming machines now in operation throughout 14 venues on a revenue share basis in the Asia-Pacific region, Elixir Gaming's primary focus is on driving continued improvements in the net win per day per machine as this will increase our return on investment in each of our markets," said President and Chief Executive Gordon Yuen.

In a conference call with investors, Yuen added that the company is "disappointed" with its earnings results.

The company said that it is re-evaluating underperforming venues and canceled one contract in July.

For the month of July, Elixir said average the net win the company takes from each machine on a daily basis rose to $51, from $33 in June and $29 for the second quarter. Elixir expects its venues in operation to grow to between 16 and 18 by the end of the year.

The company said it expects positive earnings before interest, taxes, depreciation and amortization in the second half of 2009.

"We believe (Elixir's management) is making the necessary operational changes to achieve a positive return on capital deployed," said Roth Capital Partners analyst Todd Eilers in a note to investors. "However, with profitability pushed out another year we do not see a compelling reason to own the stock at this point in time."

Eilers has a "Hold" rating on the stock.

Also Wednesday, Elixir said Chief Financial Officer David Reberger has resigned effective Friday to pursue other opportunities. He will remain a consultant to the company for the rest of the year.