Company launches search for new CEO

Gaming equipment provider Shuffle Master has hired an executive recruitment firm to look for a possible replacement for company Chairman and CEO Mark Yoseloff.

Deutsche Bank gaming analyst Bill Lerner first reported the effort Monday morning in a note to investors before trading on the Nasdaq National Market opened. Shuffle Master, in a statement, confirmed the news Monday afternoon.

The company's board of directors has asked SpencerStuart, a worldwide management consulting firm that specializes in senior-level executive searches, to evaluate Shuffle Master's long-term succession plans for the CEO position.

Yoseloff's one-year contract expires Oct. 31 and the board, in conjunction with Yoseloff, is evaluating alternatives that could include a contract extension or the appointment of new CEO. Should Yoseloff be replaced, the board would discuss a continuing role for him with the company, the statement said.

Yoseloff did not wish to comment beyond the company's statement.

Shuffle Master is one the gaming industry's leading table game providers, offering casinos the use of such titles as Let It Ride and Three Card Poker, as well as selling table game casino management systems and automated card shufflers.

Shuffle Master has faced several financial issues in the past year, many related to a $108 million acquisition of Australian slot machine maker Stargames in February 2006. The company was forced to restate its 2006 earnings because of an internal accounting error, which caused the company's stock price to lose roughly 75 percent of its value in the past 12 months.

A year ago, Shuffle Master's stock was trading for more than $31 a share. The stock closed Monday at $12.31, up 64 cents or 5.48 percent from Friday's close. In November Shuffle Master shares were valued at less than $11.

Gaming analysts applauded Shuffle Master's recent $30 million buyout of Progressive Gaming's table game division, which included adding Caribbean Stud Poker to Shuffle Master's portfolio.

"The company seems to be pulling itself out of the abyss." Lerner said. "We'd suspect the board is looking for leadership with a different skill set in order to take Shuffle Master beyond Yoseloff's operating sweet spot."

Yoseloff came to Shuffle Master as an executive vice president in 1997 and became CEO in June 2001. He had more than 20 years of design and development of electronic games when he joined Shuffle Master. Yoseloff holds a doctorate in finite mathematics from Princeton University and is the co-author of college text book on discrete mathematics and probability theory.

Lerner credited Yoseloff with helping to increase Shuffle Master's revenues by approximately $200 million during his tenure.

"Yoseloff's strength has clearly been product development and we'd expect for him to remain affiliated with the company in some type of product strategy and development capacity once a replacement is named," Lerner said.

Macquarie Research Equities gaming analyst Joel Simkins hinted last week that Shuffle Master might be seeking a new direction. The Wall Street firm recently initiated gaming coverage and Simkins, in his first report on Shuffle Master, said there could be a management shake-up in order to boost the company's stock price.

"Investors seeking a quick turnaround may come up empty-handed," Simkins said. "As the shares have dipped to their lowest levels since 2003, management has lost some credibility with investors and it could take time for the wounds to heal."

Contact reporter Howard Stutz at hstutz@reviewjournal.com or (702) 477-3871.