To make it easier for A-B link, I copied the detail below
THANKS A-B for a reminder of another segment that will gear up again for EGMI in 2010 and beyond
Transcript Excerpt from the May, 4, 2007 Scientific Games Q1 Conference Call
(Q&A Regarding Electronic Games Agreement)
Question: Electronic Game Card, I know that a long time ago we talked about that being a possible big future for the company. You just cut a new deal with the company for 10 years. Could you just explain the potential and maybe how this thing could take off again.
CEO’s Answer: Um sure, recognizing that um uh you know most of what I’m going to say is still in the nature of uh...uh of, of a hypothesis because until we actually do it, you know, we’ll never know.
The, as you know I personally have been a huge fan of this product and....uh...and very supportive of it.
The, uh...our involvement in it has really only been...uh...in assisting in the design of the games and then...uh...labeling the product when it comes back from China and obviously doing the sales and marketing. But the...all of the engineering and production and, and the logistics of it has been handled by the Electronic Game Card Company and the work that has been done in the plant in China...that has had, at least to...uh...my mind, uuuuhhhh....you know...less than..than...uh...less than ideal performance. And..and...and in a couple or particular respects. One is that delivery times are very, very, very long...uh...uh...measured in terms of several months.
So that there are some lotteries that can plan 6 or 7 or 8 or 9 months ahead, but most lotteries can’t. One of the...you know one of the many reasons that we maintain such a strong position in the instant ticket business is that our turnaround on orders for new games is vastly quicker and superior to what any of our competition can do...and...and that’s...that’s a tremendous competitive advantage of ours in the market place. So that’s something that we really understand and lead times of several months...when you know when we can sometimes turn a hot game around in a couple of weeks is...is...is just not acceptable. And..and the other thing is the cost is just been to high.
So...uh...you know we...we reentered the deal with them to...to continue to have, for the next 10 years, the exclusive license for the product in the lottery space. But...uh...but we’re looking at, at the same time, is the possibility of taking over all of the operational responsibility for the product, redesigning the way the product is manufactured... ...uh...making the investment ourself in the engineering and production and then we would sell the product back to them for them to sell in the other markets they serve such as, for example the..uh...the promotional market.
Uh...but...uh...but we haven’t made that decision yet because we haven’t yet been able to complete the design of the model of what that...uh...what that production process would look like. But that would certainly be the ideal...the ideal end-game there. That we are able to solve that problem, that we take the production over, that we make the investment, that we significantly lower the cost, shorten the lead time and...and if we can do that, then there is certainly little doubt in my mind that this can be a real category killer.
Questioner: Right...uh...last thing here...You think if you got a low price you could get an order from a state like New York for a million units, per se.
CEO’s Answer: Uh...I think if you can get the right price....uh...lets...without specifying New York, let me say that I think that if we had it at the price...the right price and the right delivery...I think we could get an order from one of the major states for 10 or 20 million. Never mind 1 million.
[ Note: In EGMI’s April 9, 2007 PR, they listed a number of highlights. One had to do with the Kansas lottery’s 2nd order for December 2006. They stated the following:
“The second order from the Kansas Lottery for EGC Lottery GameCards was received by the Kansas Lottery and was immediately being distributed to sales locations. The $20 GameCard has been such a success with customers that Kansas has had to reorder within five weeks of receiving its first shipment of 120,000.”
So there they are talking an order (or both orders) of the size of 120,000. The Scientific Games CEO is talking one order of 10 to 20 million cards if they can take over the engineering and production and get the prices and delivery times down]
AI
