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Gaming Guru

Howard Stutz

Second-quarter revenue increases for Shuffle Master

10 June 2008

LAS VEGAS, Nevada -- Gambling equipment supplier Shuffle Master grew revenues 10 percent in the second quarter despite the company's move away from direct product sales.

Shuffle Master reported revenues of $49 million in the quarter ended April 30, compared with $44.6 million a year ago. Revenues from the company's lease and service division was $19.2 million.

Meanwhile, the company said net income in the quarter was $3 million, or 9 cents per share, compared with net income of $3.4 million, or 10 cents per share, a year earlier.

Analysts polled by Thomson First Call had forecast earnings of 7 cents per share.

"Despite the fact that the company continues to rely less and less on product sales ... revenues were a record for our fiscal second quarter compared to any second quarter in our history," Shuffle Master Chairman and Chief Executive Officer Mark Yoseloff said in a statement.

Shuffle Master executives pointed out the results from the second quarter were a vast improvement from the first quarter, in which the company reported a net loss of $1.8 million or a loss per share of 5 cents.

With casinos either not expanding or slowing their capital expenditures for new games and equipment, Shuffle Master is relying more on leasing its products, which offers a more steady revenue stream.

"At the same time, the company's cost savings initiatives and commitment to debt reduction aided the bottom line and strengthened the balance sheet," Shuffle Master acting Chief Financial Officer Coreen Sawdon said. "We saw improved gross profit and operating margin this quarter compared to the prior sequential quarter."

Even with the developing lease and service division, Shuffle Master continued to rely on its table game division, which had revenues of $9.8 million in the quarter, an increase of 31 percent from the prior year. The company's main games include Caribbean Stud, Three Card Poker, Let It Ride and Texas Hold 'em Bonus Poker.

Shuffle Master reported earnings Monday after trading closed on the Nasdaq National Market. Shares of the company fell 6 cents, or 0.95 percent, to close at $6.24.