The sale of the Rainbow casino helped push Bally’s net income up 54% to $51 million or $0.89 a share. Excluding revenue from the $80 million sale and other one-time items Bally earned $0.55 a share, slightly below predictions of $0.56 per share.

Revenue remained relatively stable at $195.2 million compared to $195.9 million in the same period last year. While revenue in the gaming equipment division fell 19%, an increase in gaming operations and system divisions offset the loss.

For the full fiscal year, Bally post net income up 9% to $137.5 million or $2.38 a share.

However Bally does not see a huge change in its fiscal 2011 outlook until the second half of the period, forecasting earnings of $2.05 to $2.40 a share.

The casino game developer will release its fiscal 2010 earnings after the market closes tomorrow, with analysts anticipating quarterly earnings of $0.56 per share on revenue of $202 million and full year earnings of $2.17 per share.

Bally reported that earnings were down 23% to $22.6 million during the previous quarter that ended March 31, however after adjusting for one-time items, Bally topped consensus estimates buy a penny hitting $0.52 per share.

Bally is currently trading below its 50 day moving average of $35.31 and below its 200 day moving average of $40.25, reaching its highest trading price for the month of $33.43 on August 2 and its lowest price of $31.51 on August 10.

Bally Technologies Chief Operating Officer Gavin Isaacs said they would use the Australasian Gaming Expo (AGE) at the Sydney Convention and Expo Centre on August 8 through August 10 to bring “years of innovation back to the Australian market.”

The Expo will be used to showcase Bally’s award winning portfolio of slot machines, player-tracking and marketing systems.

Since the original announcement Bally has established a sales and service office in Sydney and staffed it with gaming industry experts that can oversee daily operations and help lead their re-entrance into the countries casino market.

Bally Australia will be led by Michael McNee as Managing Director and Ron Jeffrey as Sales Manager.

“This experienced team’s understanding of the gaming market in Australia and New Zealand ensures that we will hit the ground running as we introduce our award-winning portfolio of industry-leading games and systems technology to Australia.” commented Isaacs.

Robert J. Parente has been promoted from his role of Vice President of Systems Sales which he has held since joining the company last year to Vice President of Corporate Accounts.

While Parente will continue to oversee previous responsibilities including sales and account management of selected corporate and governmental systems clients, he will also oversee game sales in Nevada and many of the company’s North American domestic corporate accounts.

“Bob has done an outstanding job of leading our systems corporate accounts,” said Derik Mooberry, Vice President of North America Game Sales. “By taking on these additional sales and account-management responsibilities for our corporate and Nevada games customer partners, Bob will help us achieve even greater synergies of customer service and support.”

Bally has just completed its first installation of the iView Display Manager across the casino floor at Galaxy Entertainment Group’s StarWorld casino in Macau.

“Partnering with Galaxy Entertainment Group on the floor-wide implementation of iVIEW DM has been such a rewarding experience for Bally Technologies,” said Richard Haddrill, Bally’s Chief Executive Officer. “iVIEW DM is generating excitement among StarWorld’s customers with applications and information available to them right at the game.”

StarWorld patrons are now able to view point balances as well as receive promotions for resort amenities however the program can also add floor-wide bonusing games, games-within-a-game, watermark messages and announcements, celebrations of important wins and targeted marketing messages in a smaller display screen that does not interrupt game play.

Galaxy Entertainment awarded Bally Technologies, earlier this year, an enterprise-wide contract to provide comprehensive table, slot, casino management, and server-based solutions.

The in room TV system will allow the casino to deliver marketing promotions of resort amenities and events as well as provide a unique interface to player’s club accounts and features that are not available with other in room TV programs.

“We are the first gaming systems technology provider to integrate with our systems solutions the most advanced in-room, Internet Protocol (IP)-based HD-television experience available today,” said Tom Reilly, Bally Technologies’ Vice President of System Sales — Eastern North America. “Bally TV significantly elevates customer service and gives casinos another way to communicate with players, cross-promote other casino and resort amenities, and provide easy access to player’s club information. This is an exciting roll-out for Bally, and we’re honored to be doing it with our good partners at Miccosukee.”

Bally TV is a collaborative innovation from Bally Technologies and InfoValue.

Bally’s will soon offer the state’s casinos the option to offer gamblers its new expanded cutting edge Pro Series(TM) cabinets, as well as the ALPHA Elite(R) V32, Digital Tower Series, and Reel Image(TM), the industry’s only video cabinet that plays just like a spinning-reel game.

“We were the first gaming manufacturer to provide product to Washington 11 years ago, and this market is very important to Bally from both a business as well as relationship perspective,” said Gavin Isaacs, Bally’s Chief Operating Officer. “That’s why we are bringing our newest game platforms to our Washington customers, often before we take them anywhere else, and working with Washington casino operators to help them upgrade their floors with these cutting-edge cabinet designs.”

Reel Image(TM) was designed exclusively for the Washington market and has been approved by Gaming Laboratories International (GLI). Reel Image(TM) features breakthrough innovation by incorporating powerful imaging technology that makes a video slot look and perform just like a spinning-reel game.

Jean Venneman joined Bally with 18 years of experience in the gaming industry, where she quickly progressed upward through management ranks at International Game Technologies and was directly involved in the development and licensing of numerous trademarked or patented IGT slot products.

In 2008, Venneman was honored with the “Great Women of Gaming Proven Leader” award, and in 2007 she was on the January cover of Global Gaming Business magazine as “One of the Top 25 People to Watch.”

“We are extremely pleased to welcome Jean to Bally,” said Dan Savage, Bally Technologies’ Vice President of Marketing. “She is a proven leader with an outstanding gaming industry track record of success, having played a key role in the sales and development of several games and brands. Jean’s experience in strategic and tactical product planning and execution, coupled with her extensive contacts in the entertainment industry, means she will play a pivotal role in the expansion of our portfolio of licensed entertainment brands, brand libraries, and overall product marketing.”

Venneman said. “I am excited to join Bally’s tremendous team of professionals. I look forward to helping Bally further enhance its position as one of the world’s premier gaming-technology organizations.”

“Gaming industry growth to new markets should be relatively flat over the next several years” Kent wrote in a research note to investors of the firm.

Kent said he remains cautious on the sector, and believes analyst expectations for Bally are too high since there is little chance for a recovery until 2012 when states including Illinois, Ohio and Maryland should begin rolling out new gaming facilities.

With that in mind, Bally’s share price “looks expensive especially with earnings momentum slowing,” he wrote.

Shares of Bally fell $1.92, or 4.7 percent, to $38.90. The stock has traded between $26.07 and $47.47.

Bally has been selected by attendees of the Gaming Technology Submit in Las Vegas last week as the winner of the “Attendee Choice” award in Casino Journal’s 2009 “Top 20 Most Innovative Gaming Technology Products” awards competition.

The newest game on Bally’s SpinNation series of wheel-spinning games has also won the “Silver Award” in the “Most Innovative Gaming Technology” competition.

Other awards received for the game include “Best Slot Product” in the Gaming & Technology Awards at G2E last November and a 2010 Casino Enterprise Management Slot Floor Technology Award.

“We knew Cash Spin was special from the moment we saw the first prototype, and since its launch in April we have not been disappointed,” said Gavin Isaacs, Bally’s Chief Operating Officer. “We have been installing Cash Spin nationwide at a pace that exceeds Hot Shot Progressive(R), which until Cash Spin had been our most successful game. And Cash Spin is delivering outstanding performance for gaming operators, attaining more than three times house average.”

“Cash Spin was hands-down the hit of last year’s Global Gaming Expo,” Isaacs added. “Based on the high level of operator excitement about this technology, we are optimistic that Cash Spin could become the most successful game ever produced by Bally in the Company’s 78-year history.”

Last week a news report stated that game developers chosen to supply the Aqueduct Racetrack will video lottery terminals would also have to contribute to the $300 million upfront payment to the state, which confused investors causing stock prices to drop more than 10%.

However the actual rules governing the selection only requires the casino operator to pay any fees associated with the bid.

An Analyst with Roth Capital believes that the drop may have created a positive buying opportunity for investors looking into shares of BYI, who posted 52% earnings during the third quarter on revenues of $190.6 million versus $196.3 million estimates.

Earlier this month, KeyBanc analysts also raised the investment rating on Bally to a Buy with a price target of $52 per share.

Analyst Sterne Agee said that the recent drop in stock activity was most likely caused by confusion over the slot-machine maker’s role at New York’s Aqueduct Racetrack combined with overall weakness in the sector.

As New York re-opens the bidding process for the state’s lucrative contract questions have come up if game manufactures would be responsible to pay the cash strapped state licensing fees to be included in the process, along with casino operators.

Bally has a short interest ratio of 6.7 based on average daily volume of 1 million shares and 8.6 million shares short, which equates to 15.6% of the 55.2 million shares outstanding and is the largest company in the Gaming Activities industry (based on market cap).

During the past year, BYI has seen earnings per share (EPS) grow by $1.98 and is currently trading above its 20-day, 50-day and 200-day moving averages.

Shares of Bally hit a high for the day of $46.12 and a low of $44.92, with a 52 week high of $47.47 and a 52 week low of $25.44.

Last month Bally reported earnings for the first quarter 2010 of $22.6 million or $0.39 a share.

That figure represents a 23% decline in year over year earnings, compared to the same period in the prior year of $29.3 million or $0.52 a share.

Bally also reported that an impairment charge had occurred for the quarter of $11.4 million related to business in Alabama that has come under fire from Governor Bob Riley, who believes electronic bingo machines, that operate as slot machines is in violation of the states gambling laws.

Zest is one of Europe’s largest gaming technology providers and has well established relationships with the approved VLT concessionaires under Italy’s new gambling program.

“Partnering with a leading Italian company such as Zest makes good business sense for Bally, enabling us to capitalize on their already established relationships with customers and their well-entrenched sales and service network in Italy,” said John Connelly, Bally’s Vice President, International. “The technology solution required for Italy is complex, and having Zest Gaming’s well-respected service team on the ground will be critical to our long-term success.”

“Representing such a well-respected and long-standing company as Bally Technologies is a true honor and privilege,” said Luca Frigerio, Chief Executive Officer of Zest Gaming. “Bally’s outstanding reputation for innovative technology and customer service, combined with our local knowledge and infrastructure, is a partnership that will enable us to deliver very positive results for our customers.”

In addition to entering Italy’s gaming market through the sale of its slots and casino games, Bally will provide a server based central control and monitoring system designed specifically for the program.

“We’re thrilled to have partnered with two of Italy’s primary concessionaires to provide games and systems for the country’s new VLT program,” said Gavin Isaacs, Chief Operating Officer of Bally Technologies. “We will leverage our experience delivering cutting-edge and entertaining gaming devices worldwide, and our position as the leading global gaming systems provider, to deliver a custom and comprehensive games, systems, and server-based solution for the burgeoning new VLT market in Italy.”

Under the terms of both agreements, Bally will provide the companies with a network of games and Bally’s systems solutions including CMP, a technology suite that includes player tracking, bonusing, promotions and reporting tools.

HBG Group has purchased 2,000 machines and Sisal Slot has purchased 1,600 machines.

“We’re very pleased about our partnership with Bally Technologies and the cutting-edge VLT games and system portfolio they are delivering for our country’s new program,” said Antonio Porsia, Chief Executive Officer of HBG Group. “Bally’s long and proven history of providing innovative games and systems will enable us to offer our customers a whole new level of entertainment.”

Francesco Durante, Sisal Slot Managing Director, said, “I believe that selecting Bally as a technological partner for our video-lottery network is a step forward in Sisal’s commitment to excellence. I am confident that the agreement will bring further added value to our products, retail network, and consumers.”

Delivery is expected to begin in the fall.

For the period ending March 31, the game developer reported that earnings were down 23% to $22.6 million or $0.39 a share, compared to the same period in the prior year of $29.3 million or $0.52 a share.

Adjusted earnings came in at $0.52 a share, a penny above Wall Street’s expectations of $0.51 a share and revenue dropped 3% to $190.6 million, analysts had expected $196.3 million.

Bally reported that an impairment charge had occurred for the quarter of $11.4 million related to business in Alabama.

It is unclear if legalized gambling will continue in the state because of the efforts by Alabama’s governor to challenge the legality of bingo.

While unit sales of gaming machines in the quarter totaled $69 million compared to $70 million the previous year, the number of units sold actually increased from 4,368 to 4,571.

Expenses for the quarter also rose 4% to $155.6 million.

Morgan’s analysts told clients, “Bally’s ship share should continue in the low 20% area as new markets come online over the next three years: Italy, Maryland, Kansas, and Ohio. We still expect Bally to gain more market share in the domestic replacement cycle and continue to grow in the Systems business. We think Bally has positioned itself strongly for potential earnings growth.”

In the past month shares of Bally Technologies have risen 8.3% as of Tuesday’s closing price of $44.19.

In the previous quarter, the casino game developer reported an EPS of $0.58 a share, matching consensus estimates, however for this period Analysts, on average expect Bally to report earnings of $0.51 a share on sales of $197 million.

For the full year, analysts expect the company to post an EPS of $2.20 a share compared to last year’s EPS of $0.52 a share on sales of $208 million.

“It’s exciting to see this kind of third-party endorsement for our games and systems innovation, which is a reflection of our commitment to delivering the most cutting-edge and high-performing technology to our customers,” said Richard Haddrill, Bally’s Chief Executive Officer.

Bally will receive three of the ‘Top 20 Most Innovative Gaming Technology Products Awards’ for 2009 at the Gaming Technology Summit being held in Henderson, Nevada May 25-26.

Among Bally’s products that have won this honor was the Cash Spin game featuring U-Spin(TM) and Interactive Reels(TM) technology; Bally Business Intelligence(TM) data-analysis solution; and the Bally Command Center(TM) server-based solution for floor-configuration management.

Bally also recently took top honors in the “2010 Slot Floor Technology Awards,” winning two of the 10 awards in the yearly contest for the Cash Spin game with U-Spin and Bally Command Center server-based floor-management solution.

Over the past three years, Bally has won more than 20 awards for product innovation, as well as international awards for customer service and support and being the most innovative gaming technology manufacturer.

The Rating Outlook was revised to Stable from Positive with the following upgrades made: the IDR has been upgraded from BB+ to BBB- with the $183 million senior secured loan due 2012, the $75 million senior secured revolver due 2012 and the $75 million senior secured revolver due 2014 rated BBB-.

The gaming manufacturers improved liquidity profile provided by the expected sale of the Rainbow Casino and new revolving credit facility, as well as continued operational and financial improvement driven by its improving and broadening product pipeline, solid market position, and sustained debt reduction supports the upgrade.

Fitch wrote, “Despite the difficult operating conditions for casino operators, Bally’s operating momentum and solid product pipeline has continued to drive ship share solidly above its installed base market share, which has significantly improved the company’s market position over the last few years and dramatically improved its financial results.”

In February casino regulators issued a “letter of intent” to suspend Bally’s state certification citing and alleged failure to provide the department with advanced notice of shipments of gaming device software to Arizona casinos and shipping software directly to casino operation employees instead of to appropriate authorities at the tribal gaming offices.

Under terms of the settlement Bally will be able to continue to operate as a licensed vendor in the state and will pay a $175,000 fine.

Department of Gaming officials have said that this was the largest fine ever paid by a gaming device manufacturer in Arizona.

“Beyond the civil penalty, Bally is instituting the necessary internal procedures to avoid further breaches of protocol,” Mark Brnovich, director of the Arizona Department of Gaming, said in a statement. “We are satisfied in the resolution of this issue and the confirmation that our safeguards blocked any software from reaching the gaming public prior to certification.”