Disappointing numbers from 888 Holdings

4/29/10 – Despite signing some impressive deals with major companies like Harrah's, and a stream of contracts from b2b subsidiary Dragonfish, the Gibraltar-based internet gambling group 888 Holdings plc has admitted that its latest Q2 results are "disappointing".
 
The group saw an 11 percent decline in share price this week – the most in a year of trading on the London exchange – and characterised its second quarter trading as "disappointing in casino, poker and bingo." The shares have fallen 23 percent thus far in 2010, giving the company a market value of GBP 298.3 million ($452.7 million).
 
Chief executive Gigi Levy outlined in a statement to business news service Bloomberg what measures would be taken to address the performance problem, saying that the company will consider chopping expenses that could include a payroll reduction of 20 percent, and the top ten managers asked to take ten percent pay reductions in the interests of the future of the company.
 
Industry analysts opined that 888 is feeling the competitive pressure of companies like Party Gaming and Playtech, which they said have been exhibiting stronger online casino revenue growth, indicating that such a weak start to Q2 may suggest that "competitive pressures" are a factor.
 
However, Levy noted that the typical seasonal slump has been “slightly more” than last year, and postulated that this could be due to weak economies in countries such as Greece and Spain. He revealed that average daily sales were 13 percent below the first quarter 2010 in the first 25 days of the second.
 
Bloomberg reports that 888’s first-quarter operating income rose 21 percent as it added new casino and poker customers. Operating income rose to $69 million, from $57 million in the year-earlier period.
 
Levy made the intriguing disclosure that by July this year his company expects to have made two more acquisitions, a consumer gambling company, and a business with both consumers and businesses as customers.