IGT and Shuffle Master agree to bury the hatchet

Jun 5, 2001 6:53 AM

Ending litigation and joining hands for future development put smiles on the faces of investors in both International Game Technology (IGT) and Shuffle Master Inc. (SHFL) on Friday.

IGT continued to be favored by Wall Street on Monday, but not so Shuffle Master, whose stock dropped from a high of $32.80 to a closing price of $29.25.

"We were quite surprised to see the drop in the price of our shares, since we were not aware of any negative news," said Gary Griffin, Shuffle Master CFO. "We’re not aware of any negative comments being made by any analyst following the company. From time to time, analysts will be making observations regarding company activity, and one did issue a comment today, but there was nothing negative in the comment.

"It might be," he added, "that there is some misunderstanding regarding the litigation settlement with IGT. Actually, we view it as very positive."

As for the 1,264,000 shares of Shuffle Master traded on Monday, Griffin called it "staggering." During a normal trading day, Shuffle Master would average slightly more than a quarter-million shares.

Both companies announced Friday that they had settled the suit brought by IGT that alleged patent violations. The settlement provides that Shuffle Master will be able to use certain patents with certain caps being applied to units being retrofitted by Shuffle Master. Both companies will share in the retrofitting revenues.

Also, the companies agreed to cooperate in the development and marketing of five new licensed game titles to be provided by Shuffle Master. Two games will be rolled out starting in 2003 with the addition of one new game per year in each of the following three years.

The price of IGT shares jumped $1.91 to $63.36 on Friday and moved to $64.32 on Monday, an increase of 96 cents.

Boyd’s awakening

After months (some say years) of slumbering, Boyd Gaming Inc. (BYD) has found favor on Wall Street. Reasons given include the recent purchase of a Louisiana racetrack that the company hopes to convert into a slot machine casino, the construction of the $1 billion Borgata in Atlantic City, or a combination of both.

In recent months, the stock traded in the $4 range, but late last week, the price moved upward to $5.50.

Said one gaming analyst, "You can expect interest in the stock to increase as the company gets closer to opening The Borgata." The property is a 50-50- project with MGM Mirage Inc. (MGG).

But Jason Ader, the highly respected gaming analyst for Bear Stearns, has already taken note of Boyd’s purchase of Delta Downs, a move that is expected to be accretive to the company’s earnings in the near term. He said he had increased his rating on the stock from the previous "Neutral" to "Attractive."

On Monday, BYD traded 73,300 shares before closing at a price of $5.25 a share.

Hail to the chief

Richard Clemmer, recently appointed CFO of Las Vegas-based PurchasePro.com, is to be named CEO of the troubled company, according to news reports circulating Monday.

He replaces founder Charles "Junior" Johnson, who resigned abruptly two weeks ago. Since then, the company has regained some favor by restating its earnings in filings with the Securities and Exchange Commission.

When filing delays were announced, the company’s stock lost nearly all of its value, finally bottoming at $1.36 a share. After restating its revenue and loss figures, the company saw the value of its shares rise to $1.81.

Monday, when word leaked that Clemmer, an experienced company manager, was to take the CEO’s post, the stock rose again by 47 cents to $2.28.

THE INSIDER: Despite heavy opposition from Churchill Downs Inc. (CHDN), officials in Indiana have approved the construction and operation of a competing racetrack in Shelby County.

GameTech International Inc. (GMTC) reports that its net income for the three months ended on April 30 was 9 cents a share, compared with last year’s 16 cents a share for the comparable period.

Moody’s Investors Service has assigned a B3 rating to the $39 million senior notes offered by Hollywood Casino (HCS).

GTECH Holdings Inc. (GTK) has signed a long-term contract with the government-owned lottery in Warsaw, Poland.