Agilysys Wins Casino Contract, Cuts Revenue Forecast

October 21, 2008 Alex Woodie

A new casino-hotel being built in Mississippi will base its operations on a suite of applications that run on IBM‘s Power System (formerly System i) servers. It will be yet another casino customer for Agilysys, which dominates the field. However, even as Agilysys wins new customers, the poor economy forced the publicly traded company to lower its outlook for the rest of the year.

The $100 million Riverwalk Casino Hotel is currently being built along the shores of the Mississippi River in the city of Vicksburg. The property will include an 80-room hotel, two restaurants, a VIP club, a meeting and events center, and 27,000 square feet of gaming space, and is due to open later this fall.

While construction workers, pipe fitters, plumbers, and electricians put the finishing touches on the Riverwalk’s grounds and buildings, computer technicians work on installing the collection of hardware and software that will help management run the property efficiently.

Rob Long, the Riverwalk Casino Hotel’s general manager, describes what the group’s owners, Magnolia Hill, were looking for. “We wanted a property management system that addressed both hotel and casino operations, and the LMS solution provided exactly what we needed,” Long says. “It offers flexibility and 24/7 reliability, and it integrates seamlessly with our applications for casino management and player tracking.”

LMS runs exclusively on the IBM i operating system (OS) and the IBM Power Systems server. The software, which Agilysys obtained with its acquisition of Inter-American Data (IAD) in 2003 (when Agilysys went by the name Pioneer-Standard), powers 17 of the 20 largest casinos in Las Vegas and 19 of the world’s 20 largest hotels, according to Agilysys’ Web site. It’s simply the gold standard for its segment in the industry.

In addition to LMS, the Riverwalk casino will use the LMS CASH credit authorization and settlements handling module to provide instant online credit card approval combined with express check in; and the LMS Accounts Receivable module to increase operational efficiency and revenue collection.

Agilysys, which put itself up for sale earlier this year, sells a number of other software applications for companies in the hospitality sector, including i OS- and Windows-based materials management and procurement systems, another Windows-based lodging management systems, and Windows-based products for point of sale, business intelligence, content management, marketing and reservation management.

In other Agilysys news, the company cut its revenue forecast by four to 10 percent for the remainder of the fiscal year. In June, Agilysys forecast revenues for fiscal 2009, which ends March 31, would fall between $860 million and $900 million. In early October, the company slashed the forecast to $810 million to $825 million. It still managed to pay its quarterly dividend of $.03 per share.

Arthur Rhein, chairman, president, and chief executive officer of Agilysys, said customers previously had expectations for increased year-over-year spending in the latter half of 2008 and early 2009. But, “as a result of the continued uncertainty on the macro-economic front, we expect capital spending and demand for IT investment to remain soft,” he says. “With the recent turmoil in the financial and credit markets, our guidance implies a flat to somewhat negative year-over-year second half as we believe projects are more likely to be reduced in scope or delayed.”

Agilysys’ share price has been hit hard by the turmoil on Wall Street. The stock lost more than half its value during tumultuous trading the first week of October, falling from the $12 range to about $6. The stock had been trading as high as $24 during the summer of 2007.