MARKETS
Gambling giant warns of online slowdown
07-09-2005
by
The shares of PartyGaming.com tumbled 33 percent on Tuesday after the portal told investors that growth in the online poker market is losing momentum.
The shares dived despite the fact that the company reported an 81 percent increase in half-year revenues to USD437 million for the first half of 2005.
The Gibraltar-based company had net profits of USD171 million, with per-share earnings of USD0.045. That represented a 24 percent increase in net profits from the same period in 2004, when the firm had per-share earnings of USD0.036.
"While the online gaming market and poker in particular continues to show strong year-on-year growth, the rate of growth is continuing to moderate," said Richard Segal, chief executive of PartyGaming.com in a statement. "As it does so, the Group will continue to adapt its marketing strategy and infrastructure to provide greater focus on customer retention and player value."
The fall in the share price brings it below the initial STG1.16 at which it was offered only three months ago, when the company raised STG1 billion (EUR1.48 billion) on the London Stock Exchange. The company is still worth STG4 billion and is to be added to the FTSE 100 index of shares.
In its outlook the company warned that "retention rates and player yields continue to decline, at rates that are greater than anticipated."
In addition to a slowdown in the online poker market, which accounts for 90 percent of its revenues, the company also faces the possibility of regulatory restrictions in the US, its biggest market.
The announcement comes only a week after Paddy Power reported a half-year revenue increase of 62 percent from its online arm, to EUR175 million. The Irish bookmaker also reported an impressive 123 percent increase in operating profits from its online sports, poker and casino business to EUR8.1 million.
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