While most bookmakers celebrated a lucrative World Cup Final, the quadrennial football tournament heaped more misery on online gaming specialist 888.
Like many of its peers, 888 saw softness in its poker operation as gamblers defected to football betting, and its nascent sportsbook was only able to partially offset the shortfall, despite exceeding management's expectations. Poker revenues fell by a quarter to $19.6m (£12.6m), although heavy investment in marketing surrounding the launch of the new poker software helped poker revenues recover 15 per cent in August.
However, the extra $13m spent on marketing hit cash profits, which fell 39 per cent to $13m. The company also put its dividend payment on hold to focus on investment in the business, but implied that it would still pay a full-year dividend.
That investment could include further acquisitions, after the successful capture of Wink Bingo last year saw revenues in the segment more than quadruple to $23.5m. 888 is also likely to continue in its business-to-business (B2B) division, Dragonfish, which saw revenues increase 9 per cent on a like-for-like basis as it signed a flurry of new deals.
Broker Panmure Gordon expects full-year cash profits of $27.3m and EPS of 4.9¢ (from 9.1¢ in 2009).
888 HOLDINGS (888) | ||||
|---|---|---|---|---|
| ORD PRICE: | 37p | MARKET VALUE: | £127m | |
| TOUCH: | 36-37p | 12-MONTH HIGH: | 122p | LOW: 35p |
| DIVIDEND YIELD: | 5.3% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 65¢* | NET CASH: | $32.6m** | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2009 | 118 | 9.76 | 2.30 | 1.00*** |
| 2010 | 130 | 4.29 | 0.80 | nil |
| % change | +10 | -56 | -65 | - |
*Includes intangible assets of $115m or 33¢ a share **Excludes customer deposits of $33.1m ***Excludes special dividend of 2.6¢ a share £1=$1.55 | ||||
