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Gaming Guru

Howard Stutz

Shuffle Master Shares Up

23 March 2006

LAS VEGAS -- Shares of Shuffle Master soared Tuesday, one day after company executives said the gaming equipment provider's earnings per share would grow 25 percent annually over the next few years.

Las Vegas-based Shuffle Master jumped $5.82, or 22.19 percent to close at $32.05 on the Nasdaq National Market. Earlier in the session, shares hit $32.20, their highest price in more than a year.

In after-hours trading Monday, which comes between the close of one trading day and the start of another, Shuffle Master shares jumped 9.5 percent to $28.73. On Tuesday, when trading started, the company's shares immediately climbed 12 percent to $29.47.

More than 7.8 million shares were traded Tuesday. On a normal trading day, Shuffle Master's stock usually averages 700,000 shares traded.

An investors note by Bear Stearns gaming analyst Joe Greff, that was released before the market opened, helped kicked the stock into gear. Greff increased the investment house's view of Shuffle Master's stock to "outperform" from "peer perform."

Shuffle Master Chairman and Chief Executive Officer Mark Yoseloff said the company refrains from commenting on stock prices.

"Our job is to take care of business," Yoseloff said. "I have a fundamental belief in the efficiency of the public markets. If we take care of business, they'll take care of the stock."

Gaming analysts said Shuffle Master's international prospects will fuel the company's growth, as will the integration of Stargames, an Australian gaming equipment provider Shuffle Master bought in February for $108 million.

In Macau, China, MGM Mirage, Wynn Resorts, Ltd. and Las Vegas Sands Corp., are building large hotel-casinos, all expected to be open by 2007. Observers estimate 4,000 to 5,000 new gaming tables will come into play over next few years in the Chinese gaming enclave, providing locations for Shuffle Master's products, which include automated card shuffling devices and electronic chip sorters for roulette tables.

"We view Shuffle Master as a play on Macau table games growth, which represents attractive shuffler and intelligent shoe (a card reading security product) opportunities," Greff said.

"Moreover, we believe our estimates as having potential upside due to the acquisition of Australian electronic table games manufacturer, Stargames. These products should have appeal in Macau," Greff also said.

Deutsche Bank gaming analyst Marc Falcone said Shuffle Master's automated chip sorter and Table Master, a dealerless mutliplayer card game that has been making its way to market, will also fuel growth over the next few quarters.

"We believe these products are key components of Shuffle Master's long-term growth profile, with the worldwide roulette installed base very underpenetrated and multiterminal games gaining traction in Macau and domestic racino and traditional markets," Falcone said.