Friday, June 10, 2005 | 10:48 a.m.
Profit at Shuffle Master Inc. rose 24 percent as the dominant maker of card shuffler machines continued to sell shufflers and table game equipment to new and existing casinos worldwide.
The Las Vegas company earned $6.8 million or 19 cents per share in the second quarter compared with profit of $5.5 million or 14 cents per share a year ago.
Analysts expected the company to earn 18 cents per share.
Revenue rose 35 percent to $27.1 million. Revenue from table game equipment such as shufflers rose 69 percent to $17.4 million. Lease revenue rose 24 percent in that category because of more shufflers on lease and an increase in lease rates. Revenue from entertainment products such as table games was relatively flat at $9.7 million.
The company said it expects to earn from 21 to 22 cents per share in the third quarter and from 77 to 79 cents in 2005 -- in line with analysts' estimates.
Shares fell nearly 8 percent in midmorning trading to $27.25 per share. In a research note today, stock analyst Aimee Marcel of Jefferies & Co. said the company has "many detractors who bet against the company" because they believe earnings should still be higher and that the company is "putting itself at risk by selling its products in addition to leasing."
"We disagree ... (and) believe the long-term opportunity is there," Marcel said.
The company is "heavily involved" in developing table game management systems that use radio frequency technology, "the next wave of the future" for casinos, she said. It also has other products in the early stages, such as a roulette chip sorter, she said.
Shuffle Master recently announced the launch of a national tournament based on the company's Three Card Poker game. The Three Card Poker National Championship has begun holding qualifying tournaments nationwide that will culminate in a championship event at the Rio in Las Vegas from Nov. 26 through Dec. 2. The company has created a production company to televise the event, in which players will compete for more than $2 million in cash prizes.
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