Online gambling company 888 has reported record 2006 earnings despite closing their entire US-facing operations following the passing of the UIGEA into law late last year.
888 is the parent company of Casino-on-Net and Pacific Poker.
Unlike their competitor PartyGaming, which saw their profits decimated by their US-market withdrawal, including a $150 million one-off charge for restructuring their business, 888 pretax profit rose by 34% to $90.5 million in 2006, up from $67.4 million in 2005. 888 pretax profit margin also rose to 31% from 25% in 2005.
This news should see the
888 share price bounce, as the reported profit was substantially larger than market forecasts, which ranged between $58 mil and $76 mil.
Net gaming revenues increased by 7% to $289.9 million, up from $271 million the previous year.
2007 could be another record year for 888, with encouraging revenues generated in the first quarter of this year. Net gaming revenues are up 16% in the first quarter of 2007 from the fourth quarter of 2006, driven by the rollout of new products such as Blackjack in Poker, Crazy Blackjack and localized Video Slots. However, there is still much uncertainty in the industry, as evidenced by the 888 announcement this week they will be following PartyGaming out of the Turkish market.
"Given this start to 2007, the release of new products, our Bingo acquisition and our clear business strategy, we are confident of delivering future growth in 2007," said chief executive Gigi Levy.
888-A Good Gamble
Online gambling group 888 Holdings (LSE: 888.L) has announced their rollout of new, innovative products has helped the company continue its encouraging start to the new year.
The company announced in an AGM statement they expect their first quarter momentum to continue on into the seasonally quieter second quarter.
Driving growth at the company this year so far has been the rollout of new products including Blackjack in Poker and Crazy Blackjack. An all-new Bingo product has also been launched after the company acquired the online bingo business of Globalcom.
In early May, 888 started offering online casino games from their Casino-on-Net
CasinoRoom $100 bonus
platform to poker players on the Pacific Poker platform, allowing these players instant, direct access to online casino games of their choice.
Analysts are predicting a positive future for the company, as it bounces back from a tough 2006, which resulted in 888 withdrawing from the US market following the UIGEA. Hemscott.com reported that Numis has announced a Buy recommendation for 888 Holdings, with one of the Numis analysts Richard Carter saying: "In our opinion, the group's strong pipeline of new game and product development, improving trading momentum and ability to expand acquisitively given the cash balances are being currently undervalued by the market. In addition, we think 888.com remains an attractive bid target."
Numis rates 888 shares a 'Buy' with a price target of 172p. Shares in 888 are currently trading at 112.7p (at time of writing).