Playtech, The Star, and Scientific Games are three of the latest software and gaming giants to announce COVID-19-related cost-cutting measures.
Scientific Games is a major gaming product developer headquartered in Las Vegas. Its products include computerised and mechanical pokies, table games, lotteries, and much more. The company employs more than 8,500 people globally, with many in Las Vegas, Nevada.
The company is one of the industry suppliers that’s been hit the hardest in recent months. The Scientific Games share price was US$30.24 on February 12 but hit a low of only $3.96 on March 18. A slight rally increased the share prices, on the American NASDAQ, to US$10.19 on March 31.
Scientific Games Bosses Agree To Reduced Salaries
The demand for repairs and new pokies is currently low because of the enforced casino closures around the world. Low demand equals less revenue and potential cash flow problems. Scientific Games’ executive leadership team has stepped in with some cost-cutting measures.
Chief Executive Officer Barry Cottle agreed to a 100% reduction in pay until the COVID-19 pandemic wanes. The executive leadership team under Cottle’s guidance have agreed to a 50% reduction.
Cottle received $22.6 million in compensation in 2018. His basic pay was $1,406,731 plus a $750,312 bonus. The rest of his compensation came from stock options. Scientific Games executives have basic salaries ranging from $500,000 to $900,000.
The company released an official statement highlighting the cost-cutting measures.
“The company is instituting a number of cost-saving measures to ensure stability for team members and protect the operations of the Company. Some of these measures include workforce hour and pay reductions to preserve as many jobs as possible and furloughs for those support roles that have seen a decrease in industry work.”
A spokesman also revealed Scientific Games is establishing a special hardship relief fund to support employees.
“Like many others, our industry is facing unprecedented challenges from the widespread impact of the COVID-19 outbreak. We are working around the clock to take care of our employees, customers, shareholders, and other key stakeholders in these difficult times, while providing uninterrupted products and services to those customers who continue to operate.”
Scientific Games Is a Company In Good Health
The company’s share price may have plummeted recently but Scientific Games is in good financial health. It has plenty of cash in the bank and recently refinanced its debts.
“We came into this year with a very strong liquidity position and also refinanced our debt. We also extended our major maturities and lowered our interest expense. Our company has a diverse portfolio of assets, product and services that uniquely position us to weather this crisis.”
Playtech and The Star Entertainment are two massive companies who have pulled their latest dividends.
London Stock Exchange-listed Playtech has suspended its share buyback and withdrawn its dividend to protect its cash flow. Playtech revealed it is losing €4 million per month at its online sports betting arm. Annual earnings will fall because of the cancellation and postponement of major sporting events.
The company said bingo and poker has seen an increase in traffic since the social quarantines began. Playtech is worried players will become bored of playing online the longer the COVID-19 situation continues.
Star Entertainment Group recently announced plans to lay off 90% of its workforce. Its shareholders won’t receive their expected dividend either.
Shareholders in Star Entertainment Group usually receive a slice of 70% of normalised profits between them. This won’t be the case because the planned dividend for the year ending June 30, 2020, is cancelled.
The planned dividend for the first half of the current financial year is postponed by three months.
Crown Resorts Keeps Its Cards Close To Its Chest
Crown Resorts has stayed silent for more than a week despite its staff fearing job losses. The company employs more than 18,500 people but there’s been no official word from the company.
March 23 was the last time Crown issued any statement into the public domain. The short statement said it was ceasing gaming activities, food and beverage, but keeping the hotel running.