ALL 0.81% $39.24 aristocrat leisure limited

ainsworth blames ducker

  1. 3,567 Posts.

    By Allison Jackson
    February 17 2003

    Major shareholders of poker machine maker Aristocrat Leisure are calling for blood at board and executive level in the wake of the huge profit downgrade 10 days ago.

    As investors continued to desert the stock ahead of tomorrow's full-year results, attention has focused on the roles played by chief executive Des Randall, chief financial officer Lionel Jeyaraj, US president Mark Newburg and chairman John Ducker in the huge profit warning and subsequent inconsistent statements to the Australian Stock Exchange.

    Shares in Aristocrat, the world's second biggest maker of poker machines, have plunged $2.41, or 57 per cent, to $1.81 in the wake of the $28.8 million profit downgrade.

    Paul Ainsworth, a major shareholder and member of Aristocrat's founding family, said Mr Ducker should shoulder most of the blame for the bungled handling of the downgrade.

    "Mr Ducker, as chairman of Edelman Public Relations International, the company contracted to advise Aristocrat, must take chief responsibility for the damaging and confusing convolution of mixed messages going to the market," he said.



    Mr Ainsworth also questioned the huge salary, share and options packages paid to US executives and employees who had a vested interest in pushing the share price higher.

    "It is interesting to me that the US appears to have been fudging its figures to make its sales and financial performance look better than it really was. Another record profit would have to be good for the share price and everyone would be happy," Mr Ainsworth said.

    Aristocrat downgraded its estimated full-year results from $109 million to $80.2 million on February 7, blaming a failed one-off contract in Colombia.

    At the same time, however, Aristocrat assured investors the full-year results would "demonstrate the extreme resilience of the company's Australian businesses and the strong growth being achieved in the USA, Japan and the company's traditional overseas jurisdictions".

    But the company was forced to issue a second statement last Monday which said the performance of its North American operation was worse than previously thought.

    Aristocrat said information previously provided by management in North America was wrong.

    A fund manager said Mr Randall had been warned about the US management style to talk up a company's performance and then under-deliver.

    "My experience is that Americans will tell you they have achieved and done better even while they are handing their accounts over showing they didn't," the fund manager said.

    "What they need is a hard-arsed numbers man that is Australian who works for Des over there [and] who knows what's going on."

    Investor Mutual's Monik Kotecha said investors expected Aristocrat to clarify the company's sustainable earnings and discuss how it planned to restore credibility on Tuesday.

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