April 30, 2008 / 7:19 AM / 11 years ago

UPDATE 2-PartyGaming confident on 2008, Q2 start seen weak

(Adds analyst quotes, comments on second quarter)

By Andras Gergely

LONDON, April 30 (Reuters) - Online poker and betting firm PartyGaming PRTY.L said it was confident about prospects for the full year after 21 percent revenue growth in the first quarter, but analysts saw April sales figures as weak.

PartyGaming, which runs the PartyPoker and PartyBets websites, said on Wednesday revenue in the three months to March 31 reached $128.9 million, with poker revenue up 13 percent and casino revenue up 45 percent compared with a year ago.

Its shares, however, fell 5 percent as analysts said the outlook for full-year growth was not promising in light of disappointing performance in the first four weeks of the second quarter.

“They are down in absolute terms in the beginning of the second quarter, which means that their full-year revenue is going to look like a bit of a struggle,” Arbuthnot analyst Paul Leyland said.

In the four weeks ended 28 April total average daily revenue fell 1 percent, reflecting the start of a seasonally quiet period, with poker slightly weaker than expected, but casino, which also boosted the first quarter, ahead of expectations.

“We remain confident about the group’s prospects for the full year,” Chief Executive Mitch Garber said.

Numis analyst Richard Carter said PartyGaming’s trading update was “slightly disappointing” overall, but he reiterated Numis’s “buy” recommendation for the stock.

“We would see any weakness in the shares as a buying opportunity as we strongly believe the investment thesis remains compelling,” Carter said in a research note.


PartyGaming said talks with U.S. authorities over the threat of prosecution for accepting online bets could be resolved this year, though that would not imply it could re-enter the U.S. market, unless new laws allowing Internet gaming were passed.

“Some lobbying effort is under way, some noise is being made, but it’s a long way off. It’s a matter of years, not a matter of months,” Garber said of the prospects for re-entry.

PartyGaming, along with rivals including Sportingbet SBT.L and 888 (888.L), has been talking to the U.S. Department of Justice for about a year in a bid to put an end to the threat of prosecution for accepting U.S. Internet wagers in the past.

PartyGaming said it has been given the green light to launch a new sport betting business in Italy in time for this summer’s European soccer championship.

“The Italian licence can also be viewed as a small step towards establishing a regulatory framework in Europe and also adds a new revenue stream with growth,” Garber told reporters.

Shares in PartyGaming traded 4.7 percent weaker by 0819 GMT at 25.25 pence, above an earlier low at 24.75 pence. (Editing by Will Waterman)

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