PartyGaming as an investment - Quick thoughts

[Sniper]

Why Party may be a good buy now?... because it may take the analysts some time to figure out what we already know, that Party's action this weekend is +EV for them. (ie the company is good)

Why Party may not be a good buy now?... bacause the stock may still be over priced. (ie the stock is bad) [Maybe one of the fundies in here will run an analysis on the numbers]

[Sniper]

They don't even know what the real news is!

From the financial times in london this morning...

On the downside, Partygaming lost further ground with a 1.3 per cent decline to 79p after investors seemed unimpressed with news of a single account system for its 9 million customers.

[Sniper]

Empire down about 12% out defending its stock...

LONDON (MarketWatch) -- Empire Online (UK:EOL) , a network and marketing services company for the online gaming industry, said Monday that third-quarter trading has been very strong, with net gaming revenue up 71% compared to a year ago, at $31.4 million. Poker operations accounted for $23.0 million of the revenue, while casinos accounted for $8.4 million of revenue.

[Sniper]

And Reuters thoughts...

On the downside, PartyGaming (PRTY.L: Quote, Profile, Research) shed 2.2 percent after the Chief Executive of Empire Online (EOL.L: Quote, Profile, Research) warned on Monday that the overall online gaming market showed virtually no growth during the third quarter on 2005.

[Sniper]

And more spin control...

Empire defies fears of internet poker slowdown
By Tom Griggs FT.com, 08:15 BST Oct 10, 2005

The slowdown of growth in internet poker does not appear to have affected Empire Online which said that revenues jumped 71 per cent in the third quarter.

Although investors continued to treat the sector with caution following the warning from PartyGaming over growth prospects and the flat listing by 888.com in Spetember, as Empire shares fell 13.66 per cent in early trading to 158p.

The online poker group said in a trading statement on Monday that the number of real money players increased 62 per cent to 53,148 compared to last year, a jump of 24 per cent compared to the second quarter. Net revenues from gaming leapt from $18.3m in the third quarter last year to $31.4m in the same quarter this year, and 24 per cent compared to the previous quarter.

Empire, which ended talks over a £791m takeover by Sportingbet at the end of September, estimated that operating profits for the quarter would be $16.1m, a rise of 43 per cent compared to $11.3m last year. It said that over 40 per cent of the new real money players had come through its own platforms, Noble Poker and Club Dice, which it acquired over the summer.

"We are delighted in our strong trading and the strategic advances we have made during the third quarter," said Noam Lanir, chief executive. "In a period where there has been much uncertainty over potential growth rates in the online gaming industry as a whole we believe our results demonstrate the strength of our core marketing skills."

Last month, PartyGaming, the world's largest internet gambling group, saw its shares fall by a third when it said that customer growth had slowed while player retention rates and player yields had declined at rates "greater than expected", prompting fears that the online poker fad had come to an end.

However, analysts at Altium Securities, said that Empire's results demonstrated that "the majority of Party Gaming's woes are company specific".

Mr Lanir attributed Empire's success to its diversification strategy of directing new players to its own platforms, such as Noble Poker, and away from so-called "skins" such as EmpirePoker.com which uses PartyGaming technology.

In a separate announcement, PartyGaming said on Monday that it had changed its operating platform and would separate its own players from those from other companies, such as Empire, using skins. The new system will allow its customers to play a range of different games in addition to poker on the same platform, and to make side bets and deals in poker tournaments.

The change was welcomed by Empire which said that its EmpireOnline.com skin would be enhanced by the inclusion of beginners' tables with low buy in costs, as well as tables with bet limits of $100/$200.

[goodguy_1]

yea good find FT.com rules..I was looking for the Empire press release NOT Party press release.

Does Empire Online have an Invesors Relations url?..tried to goggle it real fast and could'nt find it.

[Sniper]

Probably worth noting that SportingBet (SBT.L) is also taking a nice hit so far today down about 6%.

[Sniper]

Here's the link to Empire's press release...
http://investors.ep.com/Q3_Trading_Update.htm

[Sniper]

Neteller (NLR.L) down 9%.
Party (PRTY.L) down 9%
Empire (EOL.L) down 23%
Sportingbet (SBT.L) down 6%

[SinCityGuy]

[ QUOTE ]
The change was welcomed by Empire which said that its EmpireOnline.com skin would be enhanced by the inclusion of beginners' tables with low buy in costs, as well as tables with bet limits of $100/$200.

[/ QUOTE ]

http://www.code7r.org/inquiz/0503/images/baghdad_bob_18b_sm.jpg

[Sniper]

[ QUOTE ]
The change was welcomed by Empire

[/ QUOTE ]

Gotta love spin control!!

[goodguy_1]

hahah no sshit...Empire Online will lose half it's market capitalization this week but really I assure you every is ok..

They better be talking to their investment bankers to drum up some deals fast cause without a deal they are fatally wounded. Noble Poker aint going to cut it for them when the Skin Network shrivels away to nothing .

All the skins should merge their pokerrooms together..might keep them from going broke so fast.

[LoveDub]

This was released on 10th October, which is today. There is no mention of the split with Party, and their figures all seem to be quoting player numbers as if they were still with Party.

What gives?

[Sniper]

[ QUOTE ]
This was released on 10th October, which is today. There is no mention of the split with Party, and their figures all seem to be quoting player numbers as if they were still with Party.

[/ QUOTE ]

Did you actually read the release?... specifically the section "PartyGaming relationship" /images/graemlins/smile.gif

The figures quoted are Empire numbers (including noble) only... for comparison look at last months release from party.
http://www.partygaming.com/images/interim_results_fy2005_06_09_05.pdf

[LoveDub]

Hmm, ok, on the player figures, I see that this is Empire/Noble only. But under PartyGaming relationship, all that's listed is that there have been changes to the platform. Nothing about the player split...

[Sniper]

[ QUOTE ]
Nothing about the player split...

[/ QUOTE ]

These two statements would qualify as comments on the player split...

" The creation of a new “EmpirePoker.com” led poker community alongside the fast growing “Noble Poker” platform will give the Company greater flexibility in attracting new players. "

" player liquidity on the existing system remains high : the directors of Empire Online believe that, as measured by active players, this system would be one of the top three largest poker rooms in the world;"

[Sniper]

Reuters update...

LONDON, Oct 10 (Reuters) - Growth prospects in online poker came under fresh scrutiny on Monday as Empire Online (EOL.L: Quote, Profile, Research) said the market was almost flat in the third quarter, pummelling its shares and those of rivals Sportingbet and PartyGaming.

"I don't think the market went up much in this period," Empire's Chief Executive Noam Lanir told Reuters after the firm reported a 24 percent increase in new players and revenues between its second and third quarters.

"We're much ahead of the market," he said. "From what I'm hearing, the overall market was more like flattish."

But Empire's shares were down 24 percent at 139 pence by 1006 GMT due to signs of increased competition after PartyGaming (PRTY.L: Quote, Profile, Research) said it was separating its own poker players from those directed to its site by partners such as Empire.

"Statements from PartyGaming and Empire Online contain the initial seeds of divorce," said Charles Wilson at Bridgewell Securities.

PartyGaming's shares were down 7.5 percent at 74 pence by 1006 GMT, the biggest fall on the FTSE 100 index .

"This is an all-time low for PartyGaming," said analyst Robin Chhabra at Evolution Securities. "They've never been in the seventies before."


STILL TOGETHER

The unease spread throughout the sector and even Sportingbet (SBT.L: Quote, Profile, Research) , the owner of the Paradise Poker Web site which is expected to report strong trading on Wednesday, fell 3.1 percent to 297 pence by 1006 GMT.

Empire and PartyGaming have always been strongly intertwined, with Empire Online's EmpirePoker Web site driving customers to PartGaming's software platform.

But recently Empire bought online gamer Noble Poker and it has started moving its customers across from the PartyGaming software platform to Noble Poker's Playtech system.

PartyGaming said on Monday it had built new software platforms and would now separate its own players from those entering via "skin sites" such as EmpirePoker and Coral Eurobet.

But it reiterated its commitment to them.

"It's not news there's a lot of competition out there," PartyGaming's John Shepherd told Reuters. "But we're still supportive of our skins. We've improved their platform as well as our own."

Charles Wilson at Bridgewell said the skins would lose out most from any split from PartyGaming and this was what hit Empire's shares.

"In essence, today PartyGaming has taken steps to distance itself from its skins," he said in a research note.

"We believe the skins customers will be disadvantaged, as they will not have access to PartyGaming's player liquidity," he added. "Player liquidity is one of the key customer drivers."

Lanir said smart marketing had helped the group pull in more players than its rivals, while the launch of PartyGaming's new software platform showed it was concerned about Empire's success.

"They're showing their concerns about our dramatic growth compared to them and the entire industry," said Lanir.

Empire Online said the number of new players reached 53,148 for the third quarter, an increase of 62 percent over the same period last year and 24 percent over the second quarter.

Net gaming revenues rose to $31.4 million, up 24 percent on the second quarter and 71 percent on the third quarter of 2004.

[Sniper]

Empire (EOL.L) down 30%

[lorinda]

Any way of finding out if that weird moment where it went to 160 is a typo by yahoo, or some poor trader pressing the wrong button?

Lori

[Sniper]

[ QUOTE ]
Any way of finding out if that weird moment where it went to 160 is a typo by yahoo, or some poor trader pressing the wrong button?

[/ QUOTE ]

Looks like a late reported trade.

You can see the 1 min chart on bigcharts (UK:EOL)

[lorinda]

Thanks Sniper.

We just went through 1/3rd value wiped out.

Lori

[Sniper]

As the dusts settles, more from FT...

PartyGaming, Empire Online shares plunge

Investing in an online gambling company is getting to be as volatile and unpredictable a business as playing poker.

On Monday, it was the turn of Empire Online to disappoint, with its shares falling by a third to close at 121p. That compares with the 175p at which it floated during the summer, and the 288p it reached early last month after a bid approach, which proved abortive.

Empire is a so-called "skin" operation. It does not run internet gaming itself, but delivers new punters to gaming operators' sites by marketing and it gets paid by taking a slice of the "rake", or percentage of bet, taken by the operator.

Its most important relationship is with PartyGaming, the world's leading online poker operator, and an announcement yesterday from PartyGaming appears to have been the primary reason for the share price plunge.

PartyGaming said it had moved its own poker players – about 80 per cent of those that use its sites – to a new platform of its own, on which it will eventually roll out lots of other games, with a common "wallet" – meaning customers will be able to have one account. For PartyGaming, it means better cross-selling opportunities, but it will have to rely less on skins.

Until now, its players have shared the same poker system, or tables, with four skins, including Empire. These will continue to use the existing system, but with the loss of PartyGaming's players the site's liquidity will be reduced, which poses questions about Empire's player activity and yield.

The implications of the move for both companies are unclear, but at present the market is looking for reasons to mark down online gambling stocks and it did so with a vengeance yesterday, since it also sent PartyGaming down by more than 10 per cent.

The size of the drop may also have been due to apparently mixed signals on trading from Empire.

Noam Lanir, the chief executive, was quoted by a news wire as saying the third quarter was flattish, while another representative from the company saw no sign that growth was tailing off.

After PartyGaming's profits warning of September – just months after it came to market – caution is advisable in an industry whose inner workings and growth potential few investors really seem to understand.

[Sniper]

And more post action analysis...

The volatile online gaming sector took another jolt on Monday as shares in both PartyGaming and Empire Online tumbled after PartyGaming moved to change its business model in an effort to increase the number of players using its site.

PartyGaming shares slid more than 10 per cent, while Empire lost a third of its market value. The slide was sparked when PartyGaming, the world's largest online poker group, said it was moving gamblers that play via PartyPoker.com - its own poker site - to a new operating platform so that it could cross-sell them other gaming products.

Such players account for about 80 per cent of PartyGaming's customers, with the rest generated by third-party sites such as Empire. These sites, known as "skins", direct players to PartyGaming's platform and take a share of the "rake" - the fees players pay.

Empire said it was "too early...to accurately assess what, if any, impact" PartyGaming's move would have on its short-term financial performance. The group is keen to reduce its reliance on PartyGaming and has acquired two new gaming brands, which it owns outright.

Analysts were unimpressed with PartyGaming's decision to switch customers to a new platform, saying that the group risked alienating its "skin" partners, who could take their customers to other operators.

"It looks churlish, frankly," said Paul Leyland, leisure analyst with Seymour Pierce. "Someone at the top seems to have decided they need more control of their value chain, but they haven't thought through the full implications."

Mr Leyland added that PartyGaming had not "covered themselves in glory" in the last quarter. The group's shares have fallen more than 30 per cent since it said in September that player growth rates had slowed.

Richard Segal, PartyGaming chief executive, said the company was "on track" with the new operating platform, which would allow it to "focus on optimising cross-selling opportunities".

Empire on Monday said the number of new players on its sites had increased 24 per cent between the second and third quarters. That suggests growth is slowing, as the number of new players increased 62 per cent compared with last year's third quarter.

"Take-up is certainly slowing down," said Mr Leyland.

Noam Lanir, Empire's chief executive, described the third-quarter performance as "flattish". Shares in Empire fell 62p to 121p while PartyGaming, which floated in June at 116p, closed down 9p at 71p. Shares in Sportingbet, the online betting and gaming group that last month ended bid talks with Empire, fell 20½p to 286p.

Separately, Trident, an Isle of Man-based sports betting and technology company, said on Monday it planned to float next year in an offering that would value it at up to £100m. The group plans to raise £30m, with the proceeds to be used to retire debt or increase working capital.

[Bigdaddydvo]

[ QUOTE ]
"We believe the skins customers will be disadvantaged, as they will not have access to PartyGaming's player liquidity," he added. "Player liquidity is one of the key customer drivers."


[/ QUOTE ]

Translation: Player liquidity=fishies

[Sniper]

Monday's damage...

Empire (EOL.L) -33%
Party (PRTY.L) -11%
888 (888.L) -11%
Neteller (NLR.L) -10%
Sportingbet (SBT.L) -5%
WPT Ent (WPTE) -2%
Cryptologic (CRYP) -1%

[Sniper]

And in Tuesday's trading...

Empire continues its slide down another 18%, while party and crew try to find their footing.

[Sniper]

Tuesday's damage (note I'm rounding off)...

Empire (EOL.L)..... -16%
Party (PRTY.L)...... +1%
888 (888.L)......... +2%
Neteller (NLR.L).... -4%
Sportingbet (SBT.L). -1%
WPT Ent (WPTE)...... -6%
Cryptologic (CRYP).. -5%

[HoldingFolding]

relevant? (http://forumserver.twoplustwo.com/showflat.php?Cat=&Number=3647584&page=0&view=colla psed&sb=5&o=14&fpart=1)

[Sniper]

And on Wednesday Sportingbet comes out and says all is right with the world...

Online gaming stocks were among the few shares in strong demand, encouraged by a profit surge at Sportingbet (SBT.L: Quote, Profile, Research) , which said that poker revenues were booming.

The results contrasted with downbeat comments on Tuesday from rival Empire Online (EOL.L: Quote, Profile, Research) and helped to boost shares in Sportingbet, as well as PartyGaming (PRTY.L: Quote, Profile, Research) and Empire Online, by about 7 percent each.

[Sniper]

This article from the UK based Times online on monday has some glaring errors, but its worth a read...


PartyGaming doesn't want strangers at its poker tables. Empire Online says it didn't want to play anyway. Bryce Elder asks: who's bluffing?

Online poker companies are rapidly turning into this year's busted flush. Fears of a slowdown have today wiped more than £250 million off the value of the sector's biggest names, after one said growth has been flat and another appeared to turn its back on its main source of new punters.

PartyGaming, the web's biggest operator of poker rooms, said it has shifted all existing customers onto its own PartyPoker.com system, and has divided customers into two groups: those who join through the company's own sites, and those playing via affiliates.

Empire Online, which runs PartyGaming's biggest affiliate site, responded by saying the company must have been panicked by its own growth - a 24 per cent increase in new players over the third quarter.

"They’re showing their concerns about our dramatic growth compared to them and the entire industry," Noam Lanir, Empire Online's Chief Executive, told Reuters. "From what I’m hearing, the overall market was more like flattish."

Perhaps PartyGaming is running scared. But it is worth noting that Empire and PartyGaming are very different businesses.

Empire provides so-called "skins" - front-end interfaces that sit on top of the gambling software offered by PartyGaming and rivals such as 888.com. In exchange for attracting punters towards these skins, affiliates such as Empire will take a percentage of the pot from each hand that's dealt.

The amount of the pot held by the house for each hand (the rake) usually equates to about 3 per cent of the total up to a maximum of $3 a hand. For delivering punters to the table, affiliates such as Empire will get to keep anything up to a quarter of that rake, depending on how much is being bet by the player they provided.

All these percentages-of-percentages may not sound like much. But the beauty of running an affiliate is that it doesn't cost much either. At the interim stage, Empire took in $41 million in gaming revenue, against administrative expenses of $1 million and a cost of sales - mostly advertising - of $20.8 million.

That's a profit margin just shy of 51 per cent.

A margin like that will attract competitors - particularly if your business has no barriers to entry and negligible start-up costs. Sure enough, the affiliates market has mushroomed and the battle for customers is happening between the skins rather than the betting sites themselves.

Rival affiliates are returning their share of the pot through increasingly generous bonuses to the most valuable players; these so-called rake-back schemes are where profit margins disappear.

The problem for PartyGaming is that, by its own admission, 70 per cent of its revenues are generated by just 10 per cent of its punters. These are the high-rollers who are most likely to switch from the main site to an affiliate because of the bonuses on offer. At best, their defection will cost PartyGaming a percentage of the pot; at worst, it means losing a top-tier customer.

So, while the affiliates with their bonus schemes have delivered revenue growth twice as fast as PartyGaming's own efforts in the first half, the increasing price war to attract punters has created the firm's biggest competitor.

PartyGaming's answer, as revealed today, is to choke the companies that are driving its growth. This will be done by ghettoising the affiliates and skin users, thereby denying them the benefit of liquidity. Affiliates need a huge number of players to make all those tiny percentages of the pot add up - which is exactly what PartyGaming is denying them.

For Empire, this slow strangulation will likely mean it will have to rely on the back-end software provided by the recently acquired Noble Poker. That means any rake-back schemes will be coming straight out its own profits. And - perhaps because smaller sites have fewer inexperienced players to beat - the company may continue to lack the scale needed attract the high rollers PartyGaming is trying to retain.

And for PartyGaming, the move to cut off its main customer-acquisition driver could suggest that - after just four months as a listed company - management is already preparing for online poker to go ex-growth.

[Sniper]

Here's a link to the Sportingbet press release (http://mwprices.ft.com/custom/ft-com/story.asp?siteid=ft&dist=ft&guid=%7B030310C3%2D661 7%2D43E9%2D8076%2DD667AB03B0FF%7D)

[Sniper]

And in Wednesday's trading...

Party (PRTY.L)...... +10%
Sportingbet (SBT.L). +9%
Neteller (NLR.L)....... +5%
Empire (EOL.L)........ +4%
888 (888.L)............ +4%
Cryptologic (CRYP)... -2%
WPT Ent (WPTE)...... -3%

[Peter666]

ex growth - does that mean exponential growth or negative growth?

ghettoising - that is not a word. What the hell happened to the Queen's English?

[Sniper]

[ QUOTE ]
And for PartyGaming, the move to cut off its main customer-acquisition driver could suggest that - after just four months as a listed company - management is already preparing for online poker to go ex-growth.

[/ QUOTE ]

In this case, I'm assuming he means no growth. As in why do you need to partner with a marketing company when there are no more people to market to.

He's wrong in this assessment in soooo many ways!! (I did note at the top that this article contains glaring errors) /images/graemlins/wink.gif

[HesseJam]

[ QUOTE ]

He's wrong in this assessment in soooo many ways!! (I did note at the top that this article contains glaring errors) /images/graemlins/wink.gif

[/ QUOTE ]

Good example that it is tough to cover many industries as a beat writer. Also good example that everybody should always take these sorts af analysis with a grain of salt.

[Sniper]

NEW YORK, Oct. 13 /PRNewswire/ -- On October 5, J. Patel, CEO of MRLD Holdings, Inc. (OTC: MRHD - News) updated the investment community in an all-new, exclusive interview with Wall Street Network (www.wallst.net). Interview highlights include detailed discussions on the following topics:

- recent acquisition of LoboGaming
- market opportunity for the Company's online gambling platform in the
Indian and Chinese market
- gambling culture in target markets
- popularity of Teen Patti (Indian three-card poker game)
- strategy to capture market share in the Indian market
- timeline for revenue breakout
- upcoming strategic and financial milestones

To hear the interview in its entirety, and to read an in-depth report on the Company, visit http://wallst.net/superstock/MRHD/mrhd.html

On October 12, Steve Lipscomb, Founder, President and CEO of WPT Enterprises, Inc. (Nasdaq: WPTE - News) updated the investment community in an all- new, exclusive interview with Wall Street Network. Interview highlights include detailed discussions on the following topics:


- strategy to capture market share in international markets
- online gaming initiative
- what separates PPT from other televised poker tournaments
- forthcoming growth in the Company's consumer products division
- establishing WPT as the NFL or NBA of poker
- upcoming strategic and financial milestones

On October 5, Richard Baldwin, Chief Financial Officer for Shuffle Master, Inc. (Nasdaq: SHFL - News) updated the investment community in an all-new, exclusive interview with Wall Street Network. Interview highlights include detailed discussions on the following topics:


- intellectual property lawsuits, and their impact on the Company's
financials
- third quarter financial highlights
- key drivers behind the growth
- steps the Company has taken to ensure long-term growth
- product pipeline
- steps the Company has taken to prevent growth from stalling
- upcoming strategic and financial milestones

To hear the interviews in their entirety, visit www.wallst.net (http://www.wallst.net) . The interviews can be accessed by locating the respective company's ticker symbol under the appropriate exchange on the left-hand column of the homepage, or by entering the respective company's ticker symbol in the audio search window.

[Sniper]

Thursday's trading....

Empire (EOL.L)....... -17%
Sportingbet (SBT.L). -5%
Neteller (NLR.L)....... -4%
Party (PRTY.L)....... -3%
888 (888.L)............ -2%
Cryptologic (CRYP)... -1%
WPT Ent (WPTE)...... -1%

[SonofJen]

Wow. How about them apples. You think tomorrow more of the same?

[Tzak]

Isn't there a problem with chinese gambling?It's illegal and they somehow restrict sites?

[Sniper]

and to close out the week, friday's trading...

Party (PRTY.L)....... +4%
Neteller (NLR.L)....... +2%
Empire (EOL.L)....... -1%
888 (888.L)............ -4%
Sportingbet (SBT.L). -6%
Cryptologic (CRYP)... -1%
WPT Ent (WPTE)...... +2%

[Lansky]

Bought some prty friday, will be buying more on dips unless story changes

Poker growth will slow but continue imo, US mature market, but still international expansion.
Also loaded up on cryp, cryp casino business is stagnant (also concern over losin betfair poker), but $6/sh cash, and their poker numbers still growing strongly....

[Sniper]

Monday 10/17 Trading results...

Cryptologic (CRYP)... +8%
Empire (EOL.L)....... +7%
WPT Ent (WPTE)...... +1%
Party (PRTY.L)....... +0%
Sportingbet (SBT.L). -2%
Neteller (NLR.L)....... -5%
888 (888.L)............ -5%

[Sniper]

TORONTO--(BUSINESS WIRE)--Oct. 17, 2005--CryptoLogic Inc. (TSX:CRY - News; NASDAQ:CRYP - News; LSE:CRP - News), a leading software developer to the global Internet gaming market, announced today that Mr. Lorne Abony has resigned as a Director of the Board of the company. The Chairman of the Board, Mr. Robert Stikeman, noted that Mr. Abony has provided a unique perspective to the discussions amongst directors, as a CEO of another online entertainment company. Mr. Stikeman understands that Mr. Abony's responsibilities at FUN Technologies no longer permit him to devote the appropriate time to serve as Director of CryptoLogic, and thanked him for his contributions over the past two and half years.

[Sniper]

Tuesday 10/18 Trading results...

Sportingbet (SBT.L). -5%
Neteller (NLR.L)....... -3%
Empire (EOL.L)........ -3%
WPT Ent (WPTE)...... -2%
Party (PRTY.L)........ -1%
888 (888.L)............ -1%
Cryptologic (CRYP)... +0%