Weak poker trade drags on PartyGaming

Analysts once again slashed their full-year earnings forecasts for PartyGaming after the online gaming group cautioned that trading at its core poker unit had been weaker than expected.

The owner of the PartyPoker and Partybet websites said trading in poker, which accounted for nearly two-thirds of group revenue and profits last year, continued to be held back by competition from sites that accepted players from the US.

Jim Ryan, the newly appointed chief executive, said: “The poker market is very competitive. Groups that can take bets from US players are going to have more liquidity, which in turn attracts more players. What we are also seeing is that these groups are spending money courting players in Europe as well now.”

In the eight weeks to August 25, average gross revenue at the poker division was $835,000 a day, a 11 per cent decline from the $942,000 daily average recorded during the second quarter.

Poker player volume, having fallen 7 per cent during the first six months of the year to 62,600, compared with 67,200 per day in the year before, fell to 50,800 per day in the past two months.

Mr Ryan said the company remained confident about its prospects, adding that the relaunch of the PartyPoker site should help bring back punters, though he declined to give details.

The disappointing trading overshadowed what was otherwise a solid set of first-half results and prompted some analysts to downgrade their earnings forecast.

Deutsche Bank, in its fourth downgrade this year, reduced its forecasts for 2008 earnings before interest, tax, depreciation and amortisation by 5 per cent to $148m and net revenue by 6 per cent to $511m.

Jon Tarasewicz, an analyst at the bank, said PartyGaming had been “unfortunate” with technical problems in August but “it needs to deliver better trading momentum and/or reach an agreement [with the US justice department] before the stock would really perform”.

Dresdner Kleinwort downgraded its 2008 ebitda forecast by 5 per cent to $152m and its revenue estimate by 4 per cent to $520m.

The shares fell 4½p to close at 209¼p.
Copyright The Financial Times Limited 2008

News Added: 30 August, 2008

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