Aristocrat falls $29m short of forecast

After placing its shares in a trading halt on Thursday morning, Aristocrat yesterday announced to the Australian Stock Exchange that its earnings for the 12 months to December 31 were expected to be $80.2 million $28.8 million less than the original forecast of $109 million.

Investors dumped Aristocrat shares in response to the announcement, sending the share price plummeting $1.82, or 43.13 per cent, to $2.40, its lowest level in almost four years.

Aristocrat, the world's second- biggest poker machine maker, said a reneging customer in South America was responsible for the massive profit downgrade.

A ``large transaction" involving the sale of electronic gaming machines had gone wrong after the customer failed to fulfil a number of contractual obligations, it said in a statement to the ASX.

Speculation circulated the market that a bank acting on behalf of the customer might have been at fault, forcing Aristocrat to withdraw from the deal.

In an effort to reduce the fallout from the downgrade, Aristocrat said the full year results would show the ``extreme resilience" of the Australian market and ``strong growth" in the US and Japan.

Analysts were fuming at the timing of the announcement, less than two weeks before the company is due to report its full year earnings, and lack of detail.

Analysts questioned how a one-off contract with a customer in South America, a market which contributes less than 10 per cent to Aristocrat's earnings, could wipe almost $30 million off the bottom line.

The profit downgrade has raised serious concerns over the company's operations in the US, which Aristocrat has relied on to drive revenue growth.

In 2001 Aristocrat paid $US180 million for Las Vegas gaming systems developer Casino Data Systems as part of its plan to snare a 20 per cent slice of the Americas market by 2005.