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Aristocrat Leisure Shares Drop on Weak Outlook

Australian gaming machine maker Aristocrat Leisure said on Tuesday its underlying earnings growth this year would be "well below" target, sending the stock down 8 percent to its lowest in more than three years.

Earnings this year would be broadly in line with those of 2007 after a weak first half, Aristocrat Chief Executive Paul Oneile told shareholders.

Aristocrat, the world's No. 2 slot machine maker, expects underlying operating earnings growth of 5 percent at current foreign exchange rates, "well below the company's target," Oneile said.

Shares in Aristocrat dropped to A$7.40, the lowest since October 2004, and were down 6.7 percent at A$7.50 at 0042 GMT. The stock traded above A$17 in February 2007.

Aristocrat has been hit by a strong Australian dollar, a fall in demand for new machines in North America, and softer demand in Australia due to smoking bans in pubs and clubs and other regulatory changes.

"While profit for the first quarter is in line with that of the prior year, results for the second quarter are expected to be impacted by more challenging market conditions," Aristocrat said. "Market conditions across much of our business are challenging and will impact short-term results."

Aristocrat said one-off costs from strategies to improve cost efficiencies would hit 2008 earnings. Its 2007 net profit rose 3.4 percent to A$247.2 million ($231 million).