Partygaming Update Good For Poker Industry
Published: Saturday, October 22, 2005 Online-Casinos.com
PARTY GAMING UPDATE
A good day for the group...and for confidence in the poker industry
Following up on our Online-Casinos.com & InfoPowa report on the positive Party Gaming results and share price yesterday there has been widespread positive comment across the UK media.
Shares of PartyGaming Plc, rose by the most since its June initial public offering after the company said business is recovering from a slowdown in the third quarter. Earlier pessimism had caused a dip of almost 40 percent in the share price since the IPO.
"The whole of the sector will sigh complete relief,'' said Andy Brough, who helps oversee $6.5 billion at Schroder Investment Management in London.
"The whole of the sector will sigh complete relief,'' said Andy Brough, who helps oversee $6.5 billion at Schroder Investment Management in London.
Poker revenue in the fourth quarter so far is 10 percent higher than the average revenue for the third quarter. Sales of PartyGaming's casino games were also `"...very much above expectations,'' Chief Executive Officer Richard Segal said.
On the back of the results the shares rose as much as 11.75 pence, or 15 percent, the biggest gain since the June 27 initial stock offer. They traded at 86.75 pence at 3:20 p.m. Friday in London, giving the company a market value of 3.5 billion pounds ($6.2 billion).
"The picture to date in October is much better,'' Segal said on a conference call. ``We've seen a marked improvement in our performance.''
News of an improved fourth quarter for PartyGaming pushed rival gaming companies' stocks up. Shares of Sportingbet Plc, a U.K. Internet betting company, rose 7.7 percent to 280 pence and Empire Online Ltd. stock gained 7.2 percent to 89.5 pence at 3:20 p.m. in London.
PartyGaming controls 51 percent of the online poker market. Revenue for the three months ended Sept. 30 rose 32 percent to $220 million from $166.1 million, the company reported. That compares with an 81 percent increase in the first half.
The number of days regular users played poker and casino games increased 53 percent. New players totaled 209,372 for PartyPoker.com and 19,991 for the casino business. The average user visits the Web site once every three days, the company said.
Customer retention rates are declining as more casual players come on line. PartyGaming spent 29 percent of revenue acquiring customers in the third quarter.
"The positive current trading update should reinstall some confidence in PartyGaming after last month's interims,'' said Matthew Gerard, an analyst at Investec in London, in a note to investors. He recommends investors buy the stock.
According to research company Christensen Capital Advisors, online poker grew to a $1 billion business in 2004 from $90 million in 2002. The industry's growth will slow to 60 percent in 2006 and to 30 percent a year later from 130 percent in 2005.
PartyGaming earns 87 percent of its revenue in the U.S.
On the back of the results the shares rose as much as 11.75 pence, or 15 percent, the biggest gain since the June 27 initial stock offer. They traded at 86.75 pence at 3:20 p.m. Friday in London, giving the company a market value of 3.5 billion pounds ($6.2 billion).
"The picture to date in October is much better,'' Segal said on a conference call. ``We've seen a marked improvement in our performance.''
News of an improved fourth quarter for PartyGaming pushed rival gaming companies' stocks up. Shares of Sportingbet Plc, a U.K. Internet betting company, rose 7.7 percent to 280 pence and Empire Online Ltd. stock gained 7.2 percent to 89.5 pence at 3:20 p.m. in London.
PartyGaming controls 51 percent of the online poker market. Revenue for the three months ended Sept. 30 rose 32 percent to $220 million from $166.1 million, the company reported. That compares with an 81 percent increase in the first half.
The number of days regular users played poker and casino games increased 53 percent. New players totaled 209,372 for PartyPoker.com and 19,991 for the casino business. The average user visits the Web site once every three days, the company said.
Customer retention rates are declining as more casual players come on line. PartyGaming spent 29 percent of revenue acquiring customers in the third quarter.
"The positive current trading update should reinstall some confidence in PartyGaming after last month's interims,'' said Matthew Gerard, an analyst at Investec in London, in a note to investors. He recommends investors buy the stock.
According to research company Christensen Capital Advisors, online poker grew to a $1 billion business in 2004 from $90 million in 2002. The industry's growth will slow to 60 percent in 2006 and to 30 percent a year later from 130 percent in 2005.
PartyGaming earns 87 percent of its revenue in the U.S.
