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Why the Odds Now Favor Elixir Gaming Technologies Inc. (EGT)

An assertive management team can turn a business around. Their stocks deserve investor support even if recent track records have been poor. Here is a case in point. The second week of July 2008 has ended with the stock price close to the 52-week low. The Beta is 1.56 and the Earnings per Share have touched a disappointing -5.05.

The company makes devices for gaming tables. Computer-based systems shuffle decks of cards, verify cards, and tag chips and plaques through radio-frequencies. The company’s distribution network includes Asia and Europe, apart from the Americas. It serves an important recreation need of people everywhere.

Past business performance has been affected by poor arrangements on gaming floors. Commercial arrangements with casinos have also worked against the interests of the stock. The management has announced a series of reorganization moves. The rapidly growing Indo-China region will be the focus of turn-around efforts. All slot-management systems are to be integrated for better operations, and renegotiated agreements with casinos are anticipated. The company will also introduce new services for better deployment and controls of slot machines.

Gaming is a business that remains relatively unaffected by economic downturns. People who enjoy playing at slot machines tend to indulge in the pastime regardless of inflation and related worries. New management moves blend well with the business of the company. The stock appears set to return to profitability. A strength on which investors can count is the fact that the company’s order books are full.

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