By John Hughman, 23 March 2010
888's business-to-business division, Dragonfish, saved the day for the online gaming operator, after its losing streak in its consumer-focused casino and poker operations continued. Poker revenues slumped 28 per cent to $51.6m (£34.2m), while sales in its larger casino business fell 11 per cent to $119m.
Those falls were partly offset by the now-standalone B2B unit, which saw sales climb by a third to $51.3m. The business provides ready-made technology platforms to partners wishing to exploit their brands across online gambling, and last year signed major deals with Caesar's Palace casino owner Harrah's and South African leisure giant Tsogo Sun Gaming. Analysts remain worried that important partnerships with Sportech and Cashcade are at risk, though, as a result of their respective corporate activity with Playtech and PartyGaming. However, a newly signed B2B casino deal with bwin Italia is encouraging, marking 888's first inroad into the newly regulated Italian market.
The group said Wink Bingo, acquired in December, is already contributing to sales and profits, and that like-for-like revenues were stabilising, down just 3 per cent in the first quarter. KBC Peel Hunt expects 2010 underlying pre-tax profits of $42.4m and EPS of 10.6¢ ($37.3m and 9.6¢ in 2009).
| 888 HOLDINGS (888) | ||||
|---|---|---|---|---|
| ORD PRICE: | 101p | MARKET VALUE: | £350m | |
| TOUCH: | 100-101p | 12-MONTH HIGH: | 122p | LOW: 77p |
| DIVIDEND YIELD: | 2.6% | PE RATIO: | 21 | |
| NET ASSET VALUE: | 35¢* | NET CASH: | $88m | |
More analysis of company results
IC VIEW:
888 faces major competitive threats in both in business and consumer businesses and, on a forecast PE ratio of 14, its shares are high enough.
Last IC view: Fairly priced, 90p, 27 Aug 2009
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