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Will Progressive Gaming International (PGIC
) wind up a target of International Game Technology (IGT
), the No. 1 maker of slot machines? Rumors swirled after Progressive (formerly Mikohn Gaming) announced on June 14 that IGT might invest $40 million in Progressive in the form of a convertible security so PGIC could pay off part of its $65 million debt. This may a be "prelude to a kiss," says David Bain of Merriman Curhan Ford, which has done banking for PGIC and owns shares. It's "a question of when -- not if -- IGT will consider buying PGIC, says Bain. PGIC makes software content for slots, based on games such as Garfield and Yahtzee. It also makes gambling security systems. IGT already uses some of its products in its slots. Going beyond slots, IGT might use PGIC's chip-tracking technology. Progressive's "RFID" chips help casinos keep tabs on how much players bet and how long or often they play -- through a player's card that the dealer swipes into a computer. The chips let casinos cut cheating and reward good customers, says Bain, who rates PGIC a buy. Its stock is up from 9 in December to 14.69 on Jun. 29. Lawrence Klatzin of Jefferies upped his rating from a hold to a buy. He figures PGIC will earn 29 cents a share in 2005 and 61 cents in 2006. PGIC CFO Michael Sicuro says he has heard the rumors but "our policy is not to comment."Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them. By Gene G. Marcial