PartyGaming (PRTY.L) - 12/8 Trading Update Conf Call

[Sniper]

1 December 2005 PartyGaming Plc
Trading Update - Thursday 8 December 2005
Analyst and Investor Conference Call – 9:30am

PartyGaming Plc, the world’s leading online gaming company, will be announcing a pre-close trading update on Thursday 8 December 2005. Richard Segal, Chief Executive Officer, and Martin Weigold, Group Finance Director, will be hosting an analyst and investor conference call starting at 9.30am (GMT) on Thursday 8 December 2005.

In order to ensure access to the call, attendees should please confirm their attendance in advance by emailing Jennifer Alves: jennifer.alves@fd.com .

Dial-in details:

Dial-In No: +44 (0)20 7162 0025 (UK) +1 877 491 0064 (US)
Password: PartyGaming
UK Replay no: +44 (0)20 7031 4064 (available for 1 week)
Replay passcode: 685590
US Replay no: +1 954 334 0342 (available for 1 week)
Replay passcode: 685590

Contacts:
Financial Dynamics
+44 (0)20 7831 3113
Edward Bridges / Juliet Clarke / Jennifer Alves

[Sniper]

LONDON (AFX) - PartyGaming PLC sees full-year profit beating analysts' forecasts after it signed up more poker players and launched new casino-style games. Shares in the world's biggest online gaming group jumped.

Average daily gross poker revenues rose 14 pct to 2.7 mln usd in the two months to November, while the company said as many as 40 pct of its poker players are now also playing blackjack, one of the recently introduced games.

'Our business has continued to perform well across the board during the fourth quarter with both our poker and casino businesses showing strong growth,' chief executive Richard Segal said.

PartyGaming (LSE: PRTY.L) shares rose 11 pence, or 9.4 pct, to 128 by 12.45 am, valuing the company at just over 5 bln stg.

'To get 40 pct of their customers playing blackjack just two months after launch is pretty impressive. It suggests there's still plenty of growth to come from cross-selling products,' said Daniel Stewart & Co analyst James Hollins.

House broker Dresdner Kleinwort Wasserstein raised its full-year underlying pretax profit forecast 4 pct to 536 mln usd.

PartyGaming stock has had a turbulent ride since being sold at 116 pence in June. It hit a high of 179.5 pence the following month before plunging to a low of 67 in September after the company warned of weaker-than-expected revenue growth.

PartyGaming responded on Oct 8 with a contentious decision to ringfence its own gambling platform from that used by partners including Empire Online PLC.

Segal said the company remained on track to gain 800,000 new active punters this year after signing up 2,455 per day in the two months to October.

He added that the company's casino business had experienced a 'marked uplift' since the Oct 8 decision. On a call with reporters he refused to say whether the company had been capturing former Empire Online (LSE: EOL.L) punters.

Empire Online was forced to warn of a marked slowdown in rake generated by its EmpirePoker.com business on Oct 18 as punters flocked to its rival's websites in search of a larger pool of competitors.

Empire on Tuesday filed a lawsuit in a Gibraltar court against PartyGaming, claiming 'substantial' damages.
Segal repeated that he was 'highly confident' of a successful outcome to the case.

PartyGaming said customer acquisition costs had remained broadly stable in the latest two months.

[Sniper]

Party's Official Release (http://www.partygaming.com/images/pre_close_update_07_12_05.pdf)

[Uglyowl]

Guess the poker business is still good! Missed this post Sniper somehow, but worth reading.

Average daily gross poker revenue, 32% above the same period in 2004.

[eastbay]

[ QUOTE ]
the company said as many as 40 pct of its poker players are now also playing blackjack, one of the recently introduced games.


[/ QUOTE ]

I wonder what "are now also playing" means. Tried a few hands? Play as much BJ as poker? I suspect it is closer to the former.

eastbay

[Sniper]

[ QUOTE ]
I wonder what "are now also playing" means. Tried a few hands? Play as much BJ as poker? I suspect it is closer to the former.

[/ QUOTE ]

From the release (emphasis mine)...

[ QUOTE ]
The casino business is experiencing a marked uplift in performance following the introduction of blackjack on to PartyPoker.com on 8th October 2005. Approximately 40% of PartyPoker.com active players are now playing both blackjack and poker. Whilst this has reduced the poker revenue generated by these players, the overall revenue generated by them during the period has increased substantially. The cross-selling of blackjack to PartyPoker.com customers contributed to a substantial increase in active player days for casino which increased to 1.6 million during the period. Excluding the first week following launch, the gross revenue in casino for the period since the launch of blackjack has ranged between $0.8 million and $1.2 million per day, which is between five and seven times higher than the average for the third quarter. We expect blackjack to continue to deliver a substantial amount of revenue in future periods, although this is unlikely to be at the levels attained in October and November which benefited from an element of novelty factor.

[/ QUOTE ]

[eastbay]

[ QUOTE ]
[ QUOTE ]
I wonder what "are now also playing" means. Tried a few hands? Play as much BJ as poker? I suspect it is closer to the former.

[/ QUOTE ]

From the release (emphasis mine)...

[ QUOTE ]
We expect blackjack to continue to deliver a substantial amount of revenue in future periods, although this is unlikely to be at the levels attained in October and November which benefited from an element of novelty factor.

[/ QUOTE ]

[/ QUOTE ]

Emphasis mine.

eastbay

[Sniper]

[ QUOTE ]
this is unlikely to be at the levels attained in October and November which benefited from an element of novelty factor.

[/ QUOTE ]

Except they are running a blackjack promo in December!

Here's the leaderboard (http://www.partypoker.com/news/events/pp_wtleaders.html) (Note 1 HR = $100 wagered, and the competition stated Dec 9th)

[DesertCat]

From a recent NY hedge fund dinner

[ QUOTE ]

Jim Chanos - Short on PRTY (PartyGaming). This company is part of the poker craze. It is based in Gibraltar and the background of management is questionable. Nielsen ratings are showing single-digit to double digit declines of poker TV shows (the only exception is ESPN's poker show). Chanos says this is often a leading indicator as it happened with Martha Stewart. Interesting story: He recently heard there is a firm in NYC who hires quants from Oxford and India to play online poker and make money for the firm.


[/ QUOTE ]

[Evan]

[ QUOTE ]
He recently heard there is a firm in NYC who hires quants from Oxford and India to play online poker and make money for the firm.

[/ QUOTE ]
This is almost certainly untrue.

[DesertCat]

[ QUOTE ]

This is almost certainly untrue.

[/ QUOTE ]

I wouldn't doubt that you are right. Though I admire Chanos's "courage" for trying to make money as a short, I think I've read more than one Chanos analysis and thought he was misinterpreting some facts to make his argument. I wouldn't doubt he heard a juicy rumour and decided to run with it.

I myself would never pay people to play online when it's so easy to program a computer to do so for free.

[buffett]

Chanos is an extremely smart guy, but his CAGR over the last 15 years or so (documentation of which you can find on the MSN Berkshire Hathaway discussion board) is about +2%. He's made some terrific individual calls (Enron, Palm, etc.) with outstanding returns, but in aggregate the deck is stacked against him and all the other pure shorts.