Bad News From Empire Online
Published: Tuesday, October 18, 2005 Online-Casinos.com
BAD NEWS FROM EMPIRE ONLINE
Recently listed online poker and marketing firm warns 2005 profits will be
down
The latest bad news from Empire Online received wide publicity this week,
including mainstream comment in leading UK newspapers and on Sky News.
Having commented last month that its poker action had been flat over the past
three months, the company has now warned that net profit for 2005 will be about
10 percent below the consensus market forecast as a result of recent radical
operating changes in its relationship with PartyGaming plc.
The announcement perhaps predictably caused a dip in Empire's share price as
investors adjusted their expectations for this year and beyond. The consensus
forecast before the bad news was for pretax profits of GBP 34.2 million on revenues
of GBP 67.7 million, according to a spokesman for the group.
Although growth in new subscribers had remained "strong" across Empire
Online's gaming sites, the group warned that there had been a slowdown in poker
'rake' - or gaming revenues - since PartyGaming decided to shift all of Party
Poker's own players across to a new operating platform.
The move was an attempt by PartyGaming to cut the amount of 'rake' it passes
on to Empire and other so-called 'skins' for bringing players to its site. By
barring players from third-party sites like Empire from the new platform, PartyGaming
hopes that these players will sign up directly with PartyPoker.
Empire said the decision to keep outside players away from Party Poker's own
customers would mainly impact the value of its existing customer base, which
would not generate as much 'rake' as it did before the separation.
However, Empire said the rate of growth in new customers was still strong, and
that the value of each new player on the Empire Online network was unaffected
by PartyGaming's move.
"Empire Online is confident that the growth strategies it has in place
across its trading platforms, such as Noble Poker and Club Dice Casino...
will deliver substantial net profit growth in 2006 (albeit at lower levels than
previously expected) and beyond," said the group in a statement.
Related Pages on Online-Casinos.com:
