UPDATE 2-International Game Tech profit falls 57 pct

* EPS ex. items 28 cents vs consensus 31 cents

* CEO sees challenging economic conditions

* Shares little changed (Adds analyst comment, company comment, stock price)

NEW YORK/LOS ANGELES, Oct 30 (Reuters) - Slot-machine maker International Game Technology (IGT.N) posted a 57 percent drop in quarterly net profit on Thursday, as the economic downturn puts the squeeze on its casino customers.

The company's shares were little changed in morning trading on the New York Stock Exchange.

"Despite the lack of near to medium-term catalysts to drive earnings acceleration, we believe the long-term story remains intact for IGT: the industry is moving closer to the introduction of server-based technology at the end of 2009, and we believe this technology-driven replacement cycle will begin to accelerate into 2010, even with potentially disappointing EPS in near-term quarters," UBS Investment analyst Robin Farley said in a research note.

IGT, which makes a range of video slot games and networks, reported fiscal fourth-quarter net income of $52.1 million, or 18 cents a share, compared with $122.6 million, or 38 cents a share, a year earlier.

Looking ahead, Chief Executive T.J. Matthews projected that earnings for the fiscal first quarter would be at the low end or slightly below the company's targeted range of 30 cents to 35 cents a share.

Fourth-quarter earnings also fell below that range -- coming in at 28 cents a share, after excluding a one-time charge for writing down the value of investments. On that basis, analysts on average had expected 31 cents a share, according to Reuters Estimates.

Revenue for the fourth quarter fell 5 percent to $632 million from $663 million a year earlier.

Shares of Reno, Nevada-based IGT, which have fallen about 72 percent so far this year, were up 1 cent at $12.58 on Thursday. (Reporting by Bill Rigby and Deena Beasley, editing by Dave Zimmerman)