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Rivals take stock in Galaxy Gaming

The Las Vegas table game company you’ve never heard of is starting to make some noise.

Galaxy Gaming, not to be confused with Macau casino operator Galaxy Entertainment, reported annual earnings last week. It told investors its revenue rose 34 percent while its net loss was cut in half from a year ago.

Galaxy, which became publicly traded last year on the Over the Counter Bulletin Board through a reverse merger with a defunct investment firm, provides casinos with table games and wagering enhancements to existing table games.

Through stock sales, Galaxy raised more than $800,000, which included an investment by a competitor.

The company said in a recent filing with the Securities and Exchange Commission that it received a $500,000 investment in its common stock from two unnamed principals of another gaming equipment manufacturer.

Galaxy Chief Executive Officer Robert Saucier told stockholders the investments were a sign of respect.

“I don’t want any of you to read too much into this, but it is always flattering that our competitors think so highly of us,” Saucier said.

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CRT Capital Group gaming analyst Steven Ruggiero initiated coverage on MGM Mirage on Wednesday, publishing a research note on the casino operator with a “fair value” recommendation and $16.25 price target for the company’s stock.

That afternoon, MGM Mirage told investors the company expected to report a net loss of $96 million in the first quarter and a $255 million operational loss on CityCenter.

Ruggiero was undeterred. The company’s quarterly projections were close to the numbers he predicted in the research note. Ruggiero said management is focused on repairing the company’s financial structure, which includes $13 billion in long-term debt. He liked MGM Mirage’s plans to sell $750 million in convertible notes due in 2015.

“It really is just yet another positive step needed to clean up the balance sheet, add to liquidity and eliminate upcoming debt maturities,” Ruggiero said.

As for CityCenter, Ruggiero wants to see more-detailed information on Aria’s performance. MGM Mirage said the hotel-casino centerpiece of CityCenter would have a $66 million operating loss in the quarter.

“We are not surprised by the operating results, though there is not a lot of information on City Center to fully ascertain why it was so weak,” Ruggiero said. “The market will continue to look to 2011 so long as the consumer continues to show some improvement.”

Howard Stutz’s Inside Gaming column appears Sundays. He can be reached at hstutz@reviewjournal.com or 702-477-3871. He blogs at lvrj.com/blogs/stutz.

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