Shuffle Master misses; shares hit hard

Jun 13, 2006 3:51 AM

Missing the analysts’ consensus for its quarterly per share earnings caused a major sell off in the shares of Shuffle Master Inc. (SHFL) last week.

Investors pretty much ignored the company’s revenue report that showed a 60% increase to a record $43.3 million and pre-tax income from operations that jumped up 25% to $13.3 million. By the end of trading on Friday, the day after the company reported its numbers for the fiscal second quarter, the share price had fallen $2.75 to $34.01, a decline of nearly 7.5%.

The company reported a loss of $12.7 million or $0.37 per share compared to a profit of $6.8 million or $0.19 per share in the second quarter of 2005. However, these results for the past quarter included a $0.55 per share loss from the company’s purchase of Stargames, a gaming product company, located in Sydney, Australia.

Income from continuing operations increased 6% to $7.4 million and diluted earnings per share moved up by 11% to $0.21. The street consensus was for $0.22 per share.

Commenting on the April 30 quarter, Mark Yoseloff, company chairman and CEO, noted that "revenue was driven by outstanding sales results in all categories, including our newly-acquired Stargames products.

"Having closed the acquisition during the quarter, we are now ideally positioned in the fastest growing gaming region in the world, the Pacific Rim, with an expanded product portfolio that targets the entire casino floor."

The company also noted that on April 11 it had entered into a gaming technology alliance with Melco International Development Limited and its Macau-based subsidiary, Elixir Group, to distribute localized gaming technologies for legalized gaming jurisdictions in Asia.

The company also continued its previous earnings guidance of $1.02 to $1.06 per share for fiscal 2006.