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888 Posts Strong Continuing Operations Growth

admin — Wed, 09 Apr 2008 20:04:12 +0000

888 Holdings PLC, owner of Pacific Poker, announced its preliminary 2007 year end results, which in many respects mirrored the performance of the industry as a whole. Like many of its competitors, 888 posted excellent gains from its continuing operations. Also like the rest of the online gambling industry, 888 is still transitioning itself as a company in an effort to achieve its pre-UIGEA financial performance. 888 CEO Gigi Levy said, “2007 was a year of transformation for 888 in which we had to restructure our business following the enactment in the United States of the Unlawful Internet Gaming Enforcement Act in October 2006. I am very pleased to report that we have now successfully completed the
restructuring and repositioning of the business and have delivered record results for the year, both in terms of revenue and profit. This demonstrated the resilience of our business, the strength of our team and the continued attractiveness of our business model.”

Net gaming revenue for 888′s continuing operations (not including the US) grew by 36% year-over-year, with profits before taxes posting a 106% increase for the same period. The biggest gains for 888 came from its casino operations, which grew its non-US net gaming revenue by 33%, while poker grew at 18%. The strength of 888′s casino offering was also reflected by their product’s selection as “Casino of the Year” by both eGaming and the Online Gambling Awards.

As Levy pointed out, however, 2007 was a transitional year for 888 which is perhaps best understood by viewing its pre-UIGEA nmbers. Including the company’s past results from its discontinued US operations, net gaming revenue for 888 actually declined year-over-year. Net gaming revenue for 2007 came in at $216.9 million; short of the $289.9 million reported in 2006 and $271.0 million reported in 2005. Likewise, 888′s 2007 pre-tax profit was $45.8 million; down almost 50% from 2006 and off 32% of its 2005 figures.

Although still working to outperform its pre-UIGEA benchmark, 888′s strong performance from continuing operations added credence to company’s post-UIGEA adjustments and strategic path for growth. Levy added, “With many strategic initiatives now underway, we see a bright future for the business.” Some of 888′s new initiatives include its sports betting platform, 888sport, launched in March 2008 and its new bingo brand, 888ladies, which debuted in February 2008.

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CryptoLogic Posts Better Than Expected Earnings

admin — Fri, 21 Mar 2008 13:03:17 +0000

The internet gaming software provider CryptoLogic Limited has posted their financial numbers for the 2007 fourth quarter and full year, exceeding analysts’ expectations. Most estimates projected CryptoLogic to post quarterly earnings of $.21 per share on sales of $18.6 million. Instead, after a one-time adjustment, CryptoLogic posted earnings of $.31 per share on fourth quarter revenue of $20.4 million. Shares of CryptoLogic stock have risen over a dollar per share since the announcement.

During the company’s conference call, new President and CEO Brian Hadfield said, “These results are particularly impressive when you consider the significant industry wide impact of the US prohibition of
internet gaming in late 2006. With four consecutive quarters of growth the company has done more than turn the corner, we’ve moved swiftly into the fast lane.”

CryptoLogic has grown despite the lackluster showing of its poker revenue: poker-related revenues were down 31% in the fourth quarter when compared to same period last year. The company’s growth is now being driven by its casino offerings, which have seen a boost with recently introduced games such as those based on Marvel’s Spider-Man and Fantastic Four slot games.

Even with its four consecutive quarters of growth, CryptoLogic is still struggling with comparisons to its pre-UIGEA performance. Year over year, revenue was still down 29% while earnings per diluted share were off 74%. However, CryptoLogic’s new business model for growth is obviously beginning to pay off. Justin Thouin, Vice-President of Product Management ‘We are going to go after new licensees in a way we have not done for years. We are going to look at acquisitions and we already made some acquisitions in the past year with Parbet.”

In 2007, CryptoLogic launched 15 new games and launched seven new poker and casino sites. But it is clear that acquisition is a key strategy in their new business model for growth. In the fourth quarter, CryptoLogic acquired Scandinavian poker brand Parbet.com and the gaming portal Casino.co.uk. In 2007 they also acquired a majority interest in 568 Network Inc., a developer and distributor of online casual games to the Chinese market and an initial stake in Mikoishi (Asia Pacific) Pte Ltd, an Asian game development and design company. CryptoLogic clearly sees opportunities in the rapidly growing Asian market and disclosed that it may increase its stake in Mikoishi in the future.

CryptoLogic is optimistic that 2008 will represent another year of growth. Already this year, CryptoLogic and World Poker Tour Enterprises expanded their licensing relationship. In a deal signed earlier this month, WPT has agreed to use CryptoLogic’s full suite of casino games for an incremental guaranteed revenue of $250,000 per year. CryptoLogic will also be supplying to WPT two additional foreign language poker sites, in Spanish and German for $100,000. WPT’s full online casino is expected to launch in June of this year.

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NETeller Posts $185.7M Loss for 2007

admin — Wed, 19 Mar 2008 12:03:51 +0000

NETeller Plc has announced a sizeable loss for the 2007 fiscal year, with the largest share of the company’s $185.7 million in red ink attributable to the online payment processor’s withdrawal from the US market.

The $185.7 million figure included $136 million in settlement fees that the firm paid to the US government, following the US’s seizure of NETeller funds in transit to and from American customers. That seizure took place in late January of 2007, just after the highly publicized arrests by US authorities of Canadian NETeller founders Stephen Lawrence and John Lefebvre. Lawrence and Lefebvre were no longer connected with NETeller at the time of the arrests but the US crackdown
precipitated NETeller’s withdrawal from the American market.

Also contributing to NETeller’s rough 2007 was a total of $37 million in restructuring expenses connected to the relocation of its corporate headquarters from Canada to the Isle of Man, off Britain’s coast. The total of $185.7 million in losses wiped out the gains made in a solid 2006, when the firm reported total profits of more than $107 million.

NETeller reported some positive indicators, despite the overall rough news. Cash flow for the second half of 2007 was positive, and both European and Asia Pacific revenues were up during the year, by 28% and 44%, respectively. The two regions contributed most of the company’s $84 million in revenue during the year.

2008′s results already include one major charge and one major proceeds source. NETeller’s final payment to the US government — $38.25 million – was made on January 16, 2008 and will show up in next year’s numbers. That last payment will be offset to some extent by NETeller’s successful sale of its former Calgary, Alberta headquarters. The net proceeds from that sale are $33 million and will be receivable as of March 31, 2008. As of 2007 year end, NETeller maintained $80.8 million in cash and cash equivalents.

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WPTE Posts Loss: Turnaround Expected in 2009

admin — Sat, 08 Mar 2008 08:03:42 +0000

World Poker Tour Enterprises released its 2007 earnings report, posting a loss of $1.8 million for the most recent quarter and a loss of $9.63 million for the year. Revenues for the quarter and year were both lower than they were for the same periods last year, primarily due to the delivery of fewer WPT episodes, the absence of the Professional Poker Tour in 2007, and the lower per-episode fee associated with the WPT’s transition to the Game Show Network. The lagging performance of the production side of the enterprise was anticipated as WPT has been moving toward online gaming and a number of other ventures for future growth. “2007 was a transitional year for WPT Enterprises,” said Steve Lipscomb, the
Company’s Chief Executive Officer. “We have been focused on shifting our business from a traditional media and entertainment company to a multimedia entertainment and gaming company.”

One of WPT’s expected growth engines is its re-launched online gaming site, which has yet to achieve the revenues achieved with its old platform from a year ago. Online gaming revenues for the quarter were $220,000 compared with the $506,000 for the same period last year, and $1.15 million for the year compared to $3.15 million in 2006. WPT is looking for “modest growth” of its online gaming business in the first quarter of 2008. WPT projected revenues from online gaming to climb to $20,000-$25,000 per day by the end of 2008 and expect to reach profitability at some point in 2009. Marketing and advertising for WPT’s online site will primarily capitalize on a number of regional events and programming as well as targeted affiliate programs.

Along with its online gaming site, Lipscomb cited WPTE’s other “growth drivers,” including their ten-year deal with China Leisure and Sports to promote the national card game of Traktor in China and CLUBWPT, a new subscription-based online poker club for US players. These new ventures drove higher selling, general and administrative expenses in 2007, a trend that WPT said will continue in 2008. Unfortunately, revenues from these growth drivers are unlikely to offset those expenses in the coming year. Revenues from the China deal aren’t expected to kick in until fourth quarter of 2008. China is anticipated to be a breakeven venture in 2009 and profitable in 2010. There are currently 1000 subscribers at CLUBWPT and WPT is targeting between 16,000 and 20,000 subscribers by the end of this year. WPT expects the initiative to become profitable in 2009.

With declining margins in its production business and profitability in its new ventures scheduled for 2009, 2008 will still, in effect, represent another year of transition for WPT. But WPT easily has the cash to see this year through. WPT is still, and has always been, a cash-rich and debt-free enterprise, currently carrying $31 million classified as current assets. WPT did disclose that the company is holding $12.4 million in Auction Rate Securities (ARS) which are collateralized by student loans. While these assets had been considered liquid investments, the current credit problems in the US have resulted in a number of failed ARS auction attempts by WPT and may impact the company’s ability to sell these investments in the near future. WPT does not feel this will negatively impact their operations in the next twelve months. And although WPT is satisfied that the quality and value of these assets is unchanged, they will continue to monitor the credit market to assess whether impairment charges are required.

Mr. Lipscomb added, “With our positive momentum and world-class brand, we are enthusiastic about the prospects for 2008 and beyond.”

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