Shuffle Master posts first-quarter loss

Gaming equipment provider Shuffle Master said Monday it suffered a net loss in the recently completed first quarter primarily because of increased expenses and infrastructure costs.

Las Vegas-based Shuffle Master said its net loss was $1.8 million, 5 cents per share, for the three-month period ended Jan. 31. A year ago, Shuffle Master reported net income of $2 million, or 6 cents per share. Analysts polled by Thomson Financial expected the company to earn 8 cents per share.

Revenue rose 1.6 percent to $37.9 million from $37.3 million.

Shuffle Master Chairman and Chief Executive Officer Mark Yoseloff told investors and analysts the company would be profitable in the second quarter and for all of 2008.

"Although we succeeded in executing our strategic initiatives which drove increased recurring revenues and robust product penetration, we nonetheless experienced a modest loss in the quarter primarily due to higher expenses," Yoseloff said.

He said Shuffle Master continues to implement business initiatives that he suspects will generate earnings. In a statement, Shuffle Master said its royalty and lease revenue from casinos that use the company's proprietary table games, such as Let It Ride, Ultimate Texas Hold'em and Three Card Poker, had increased.

Shuffle Master's acting Chief Financial Officer Coreen Sawdon said her company has made progress in switching much of its business to a plan in which the company leases its table-game-management equipment, such as automated card shufflers.

"We are seeing progress in our recurring revenue model and are confident that, with time, we will accelerate our growth rate with a more stable and diversified business model," Sawdon said.

Yoseloff said a sign of the company's turnaround was the recent completion of a $14 million deal to sell electronic table games and related equipment to a casino operator in Australia.

Shuffle Master's results were affected by executive employee severance costs totaling $1.2 million and a cost of $715,000 to participate in two gaming industry trade shows, the Global Gaming Expo in Las Vegas in November and the International Casino Exhibition in London in January.

Goldman Sachs gaming analyst Steven Kent recently lowered his price target for Shuffle Master, saying the company continues to see soft demand for its shufflers and specialty table games.

Shuffle Master shares fell 17 cents, or 2.31 percent, Monday to close at $7.20 on the Nasdaq National Market.

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