PartyGaming Releases Interim Results for H1 2007

PartyGaming published their first-half interim results this week, reporting an expected slump in earnings, with revenue in the six months to end of June down 68% to $212.5 million.

PartyGaming (Party Casino and Party Poker) continues to suffer from the fallout of the UIGEA last year and their decision to withdraw from the US market. Their major competitors chose to continue trading in the US, and rather than be 'rewarded' for the closure of their US-facing operations, the company is instead entangled in protracted legal talks with the US DoJ over their activities in the US prior to the UIGEA.

After showing some promise early in the year, the PartyGaming share price crashed this week to record lows of 22p on Tuesday after a profit warning earlier this year and no real positive news since. The SP bounced yesterday after the release of PartyGaming's interim results, and was trading at 27.5p at time of writing.

The rise in share price is somewhat surprising considering the H1 results were not promising for the beleaguered online gambling company. Revenue was down 68% from H1 2006, and the company reported a loss of $50.6 million after a profit of $298 million in the first half of 2006.

The total number of new non-US customers playing with real money rose 83% to 404,000 however PartyGaming has already stated acquisition costs for these new players will be much higher than expected, severely cutting into expected profits.

"Over the coming weeks and months we expect to announce a number of further important business alliances with leading companies around the world that will help us to promote and grow our business," PartyGaming said in a statement. However, PartyGaming made similar promises earlier this year, and no revolutionary plans to turn their fortunes around have been announced since then.

CEO Mitch Garber did say the group plans to get involved in the white-labeling industry, where PartyGaming will provide the software and technology for other companies to launch online gambling services under their own brand names. Garber also said the group will be opening an Asian office next week, with a view to targeting partnership and affiliate deals in the potentially lucrative but untapped Chinese market.

"While the important fourth quarter lies ahead, the board remains confident about the group's prospects for the full year," he added in the PartyGaming statement.

What exactly this means for the former king of the online gambling industry remains to be seen.

• 
• 
• Email to a friend
• Print