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PARTY GAMING Q2 SOFTER

The London-listed online gambling group Party Gaming plc released Q2 results this week, showing a softer financial performance, but confidence that full year 2008 will still be attractive to investors. The market's reaction was an almost 8 percent drop in the share price to 234.25p, valuing the group at approximately GBP 1.98 billion.
 
The online casino operations of the group delivered a sterling performance during the quarter, but slower than anticipated business in the online poker and sportsbetting sectors detracted from that to some extent, the company advised in a trading update.
 
In April, the company announced that Quarter 1 sales rose 21 percent after gamblers made more bets on roulette and other casino games. Casino sales jumped 45 percent, while revenue from poker, the main contributor, advanced 13 percent. 
 
The current trading statement revealed that the strong performance in casino operations was achieved through increased players, cross selling from the poker operations, the growing popularity of bingo and the introduction of two new slot machines branded "Mission: Impossible" and "Saturday Night Fever." There are plans to roll out further movie-themed slots in the second half of the year.
 
"We have a deal with Paramount and are launching "Top Gun" and "Godfather" machines next and will also be announcing a tie-up with another movie studio in due course," PartyGaming's Director of Communications John Shepherd told Reuters news service.
 
First half 2008 results are due for release at the end of August, and are expected to show higher margins.
 
Analysts polled by the firm delivered a consensus that EBITDA should come in at around $156.9 million for full year 2008 (FY 2007: $112 million)
 
A slower poker scene was attributed to stronger performance by rival poker sites that, unlike Party Poker, accept American action. This resulted in the need for better player incentive promotions, and cost cutting on the loyalty scheme. Sportsbetting results were impacted by a run of adverse events - especially in international football - where players were more successful, but betting volumes were growing at an encouraging rate.
 
The statement did not shed any further light on Party's reported negotiations with US authorities regarding its liability in respect of pre-UIGEA activity in the USA.
 
Special mention was made of a one-off $4 million charge associated with the change in CEO from departing Mitch Garber to new arrival Jim Ryan.



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