PartyGaming Hit by Player Costs

Thursday, 3 May 2007

Reuters has reported that online poker and gaming firm PartyGaming (PRTY.L) has been hit by unexpected upfront costs of signing new customers. PartyGaming saw its shares fall to a maximum low of 11% as Deutsche Bank analysts cut their 2007 underlying

Reuters has reported that online poker and gaming firm PartyGaming (PRTY.L) has been hit by unexpected upfront costs of signing new customers. PartyGaming saw its shares fall to a maximum low of 11% as Deutsche Bank analysts cut their 2007 underlying EBITDA forecast by $44m to $103m.
However, the news is not all bad. The unexpected costs were for new-player sign-ups. This means that the company have paid to secure more customers, which should result in increased profits in the long run. Deutsche Bank analysts have revised their 2008 forecast up by $3m accordingly.
As one of the world’s largest online poker companies, PartyGaming is watched closely for indications of business across the board. Following legislative changes which closed down the market in the States last year, the company lost 75% of its share price. While new player sign-ups were up 117%, from January – March 2007 compared to the figures for 2008, these are more expensive as affiliates are in a stronger position in the European environment, with its regulatory and competitive challenges from state monopolies.
'The European player... is more than likely over time going to yield less money than Americans did,' Chief Executive Mitch Garber told reporters.



Tags: Poker News, PartyGaming, Hit, by, Player, Costs