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Best of Howard Stutz

Gaming Guru

Howard Stutz
 

Bally Technologies ousts CEO, taps former CEO for post

16 May 2014

LAS VEGAS -- Bally Technologies, Inc. Chairman Richard Haddrill returned to the slot machine manufacturer’s CEO position Thursday, replacing Ramesh Srinivasan in a move that surprised the investment community.

In a statement released shortly after the stock markets closed, Bally said Haddrill would cede the chairman’s role but would remain on the company’s board of directors.

No reason was given for the sudden departure of Srinivasan, who became CEO in December 2012 after overseeing the slot machine manufacturer’s systems division. Srinivasan also gave up his seat on the company’s board.

In the troubled gaming equipment manufacturing sector, which has seen dwindling sales and uninspired earnings, Bally is viewed as one of the shining lights. In 2013, Bally completed a $1.3 billion buyout of rival SHFL entertainment.

The company increased both profits and revenue in the third quarter with the help of SHFL, which brought new business products to Bally.

“It was very much a surprise,” Janney Capital Markets gaming analyst Brian McGill said of the move that brought Haddrill back to the CEO’s chair 17 months after he voluntarily stepped aside in favor of Srinivasan. “I wouldn’t say it was anything Ramesh did, but it was more of a move that addresses the current competitive nature in the slot machine industry.”

Stifel Nicolaus Capital Markets gaming analyst Steven Wieczynski said recently that Bally was the strongest of the major gaming equipment providers.

“While the news of Mr. Srinivasan’s replacement is likely to catch investors off guard, our conversations with the company lead us to believe the decision was driven in large part by a desire to alter the company’s long-term strategic vision and was in no way attributable to improprieties or concerns over the company’s recent financial performance,” Wieczynski said Thursday afternoon.

The analyst also rebutted rumors that Srinivasan’s departure would pave the way for a return to the company by former Chief Operating Officeer and ex-SHFL CEO Gavin Isaacs.

“We don’t believe this is a likely outcome given Mr. Isaacs current ties with Scientific Games and Bally’s previous decision to overlook Mr. Isaacs for their CEO position,” Wieczynski said.

David Robbins, a board member who served as chairman from 1997 to 2010, was appointed chairman.

Haddrill served as Bally’s CEO from 2004 to 2012 and on the board since 2003.

“Dick’s depth of knowledge about our company and our industry is unparalleled,” Robbins said in a statement. “We believe that he is uniquely qualified to lead Bally through its next era of growth.”

McGill thought investors would be comfortable with the change because it isn’t as if the company is bringing in an outsider.

“Dick made a lot of money for investors when he was CEO,” McGill said. “He knows the business.”

In an interview, Haddrill called Srinivasan “a terrific guy” who did an “excellent job” operating Bally over the past 17 months.

Haddrill said the change was to address the more long-term strategy facing Bally as it deals with other slot machine manufacturers in a tough sales era.

“I like the competitive environment right now,” Haddrill said. “I think there is an opportunity to form some strategic partnerships and grow the business. I believe that the opportunities we have ahead of us in the coming months are truly exceptional.”

Haddrill said the company will be evaluated on its products.

“It’s tough out there, but we see opportunity,” Haddrill said.

In a statement released by the company, Srinivasan thanked his team and recognized the company’s accomplishments over the past nine years.

“I am confident that the company is extremely well-positioned to build on some fantastic opportunities,” Srinivasan said.

Shares of Bally Technologies fell 81 cents, or 1.34 percent, Thursday to close at $59.45 on the New York Stock Exchange.