Gaming technology firm and ex-Motley Fool Stock Advisor recommendation Shuffle Master (Nasdaq: SHFL) reports its fiscal Q4 and full-year 2007 earnings results Thursday afternoon. Want to know what Wall Street expects to see? Read on. Want to know what really matters? Read on a bit more.

What analysts say:

  • Buy, sell, or waffle? Nine analysts follow Shuffle Master, giving the stock three buy ratings, five holds, and a sell.
  • Revenues. On average, they're looking for a 3% slide in quarterly sales, to $44.6 million.
  • Earnings. Profits could be cut nearly in half, to $0.10 per share.

What management says:
No news would have been better than almost any of the news out of Shuffle Master recently. Management warned investors in a December SEC filing that it would be a bit late turning in its most recent 10-K. The company promised to get it in "no later than January 14, 2008." Before that, we learned that CEO Mark Yoseloff is planning to jump ship, although he has agreed to stay on at least through October. That's not encouraging, given that just before that news, Yoseloff warned that "reverting back to a lease model" (as opposed to selling gaming equipment outright) "will cost the Company $0.20 to $0.25 a share in earnings in 2007." Worse yet, the month before, Shuffle Master lost its CFO to resignation, with the COO immediately stepping in on an "acting" basis.

What management does:
To put all this in context, now, let's see how margins have been moving at Shuffle Master:

Margins

4/06

7/06

10/06

1/07

4/07

7/07

Gross

70.1%

68.5%

65.2%

63.5%

61.7%

59.3%

Operating

35.1%

30.3%

25.8%

21.2%

18.4%

16.4%

Net

7.9%

6.7%

3.1%

(0.1%)

9.5%

6.6%

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
So the net seems to be stabilizing -- although we'll probably see it deteriorate again on the expected charges to earnings. Meanwhile, operationally, the downward trend continues, as gross margins contract and take the firm's operating margin along for the ride.

Objectively speaking, Shuffle Master seems to be imploding. But relative to its competitors, the company's margins are still in the middle of the pack. WMS Industries (NYSE: WMS) gets only a 14.4% operating margin. International Game Technology (NYSE: IGT) does much better, keeping 30.3% of its take before interest and taxes. Meanwhile, a couple of Shuffle Master's clients are even worse off . Both Melco PBL (Nasdaq: MPEL) and Progressive Gaming International (Nasdaq: PGIC) are working off negative operating margins.

Then again, having customers in dire straits probably isn't exactly good news for Shuffle Master, either.

Fool contributor Rich Smith does not own shares of any company named above. The Motley Fool has a disclosure policy.