Investment Decision
Aristocrat Leisure is the largest gaming machine manufacturer in Australia, and is one of the largest manufacturers of slot machines in the world. Its products and services are available in more than 55 countries, with vast revenues streaming in from Australia, New Zealand, US and Japan. By taking advantage of distribution partnerships, such as its partnership with the Sammy Corporation in Japan, Aristocrat has been able to focus on software development while capitalizing on the established local presence of its distribution partners. As a result, Aristocrats advanced video graphics as well its large range of ‘low-denomination’ games provides the company with a great competitive advantage. The company’s machines are gaining a reputation for superior technology, which is allowing it to effectively challenge global competitors such as the US Company, International Game. Considering that most gambling quarters are moving away from the more traditional mechanical machinery towards computerised gaming technology, Aristocrat is in a strong position to capitalise on future trends in global markets.
Aristocrat’s major US competitors, International Game and WMS Industries have both released financial results showing a significant slowdown in product sales. This suggests that the US market is either slowing down, or that Aristocrat has been gaining more market share. Aristocrat’s US revenue is definitely evidence of an increasing market share, but at the same time it is being argued that the US economy is facing a major economic slow down. There is currently next to no economic growth occurring, putting the US economy at risk of a recession. With the US market providing more than half of Aristocrat’s profits, the economic slow down is starting ...