Mikon still a player!

Aug 20, 2002 9:25 AM

Layoffs and executive suite shuffles notwithstanding, Mikohn is still very much in the game, corporate officers say.

The Las Vegas game maker took some heavy hits this month: a $5.8 million quarterly loss, the resignation of CEO David Thompson; the termination of nearly 100 employees; and a series of negative news stories questioning the firm’s viability.

But amidst the carnage, analysts list Mikohn stock as a "strong buy," with solid growth prospects. A consensus earnings estimate of 20 percent over the next five years puts the company more than three percentage points ahead of the sector average.

Thompson, vacating his $608,000-a-year position, has turned the reins over to Russ McMeekin, 36, who will serve in the dual capacities of president and CEO.

"We have great people in key positions, great new products coming out, a worldwide distribution and service network and a strong financial position (market capitalization of $19 million and cash flow of $17.6 million),’’ Thompson said.

At the upcoming Global Gaming Expo, Mikohn plans to roll out several new products, including Yahtzee Looking for Love, a multi-line interactive video game that features a character named Mr. Pips who spins around and activates bonus features. Other new games include Surprise Jackpots, Ripley’s II, Battleship Winning Encounter, Wink’s Survey of America, Clue Winning Solutions and Trivial Pursuit.

"The direction of Mikohn is twofold; to improve efficiency and to drive growth," says Bob Parente, vice president of sales. "The internal efficiencies of this company are being developed around the consolidation and centralization of certain production and operation functions. The growth portion is centered around a solid product sales and table operations with continued expansion in the slot operations and systems business."

To deal with its debt issues, Mikohn negotiated more favorable lending terms from Foothill Capital Corp. The package gives the company a borrowing capacity of $12.5 million to supplement its existing cash balance of $13 million.

Last year Mikohn raised about $100 million in bond equity that was to have bankrolled the company for several years.

Mikohn also announced it intends to purchase up to $2 million its common stock over an undisclosed period. Shares are hovering between $1 and $2, down from a high of around $7 a year ago.

The company, which produced the popular Caribbean Stud table games in the early 1990s, continues to develop progressive jackpot systems and player tracking and accounting systems for slot and table games.

"Over the past 14 years we have transformed Mikohn from a durable goods manufacturer to a recurring revenue company,’’ Thompson said.