Sure footing seen for Shuffle Master

The last time Shuffle Master Gaming sought a new chief executive, it took 18 months to attract Tim Parrott into the position.

Now, with Parrott's departure after just a year on the job, investors are understandably nervous about the company's future.

Two analysts tried to alleviate stockholder fears.

Shuffle Master announced Parrott's exit on Monday, five days after saying the CEO would take an extended medical leave related to treatment for a cancerous growth on his liver. A management committee would run the company.

The board, however, decided to permanently replace Parrott when his medical condition changed. Philip Peckman gave up the chairman duties, stepped into the CEO role on an interim basis, and Shuffle Master initiated a CEO search.

"Investors should realize this move is entirely medical-related and nothing else should be deciphered from (the) news," Stifel Nicolaus Capital Markets gaming analyst Steven Wieczynski said.

Roth Capital Partner gaming analyst Todd Eilers said Parrott implemented organizational and operational changes, following moves started by former CEO Mark Yoseloff.

"Shuffle Master needed someone to improve the company's culture," Eilers said of Parrott, who had more than 20 years in both the casino and manufacturing sides of the industry.

Restarting the CEO search may not drag out like the previous pursuit.

Shuffle Master, which distributes table games, such as Let It Ride and Three Card Poker, and sells table game management equipment, is better off financially than a year ago. It has a market capitalization of $511 million, has seen its stock price increase in the last six months and reversed a net loss in its most recently completed quarter.

"Shuffle Master presents a compelling investment," Wieczynski said.

With casinos in Pennsylvania, Delaware and West Virginia about to add table games, Shuffle Master will benefit financially.

"In my opinion, Shuffle has greatly improved and has a good future," Eilers said. "The job is now a very attractive position."

Wieczynski thought Shuffle Master would seek a CEO with Parrott's characteristics. Eilers speculated that Peckman, who spent 16 years as the top executive with the Greenspun Corp., might want the job permanently.

Eilers quashed a notion that Shuffle Master would be sold.

The timing is not right for mergers and the only company that could be interested, International Game Technology, is focusing on its core slot machine business. Eilers said IGT might only want to acquire a small, complementary game manufacturer.

Howard Stutz's Inside Gaming column appears Sundays. He can be reached at hstutz@reviewjournal.com or 702-477-3871. He blogs at lvrj.com/blogs/stutz.