Wednesday, Aug. 29, 2007

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PartyGaming stocks rebound with half-year report

Asia may be the next frontier for PartyGaming, which saw its stocks finally get a boost today.

By Sarah Polson

At first glance it seems like a contradiction: PartyGaming Plc. stocks climbed today despite reports that its half-year earnings are in line with lowered expectations for the company after it stopped dealing with U.S. customers.

PartyGaming, which owns and operates PartyPoker, saw its shares rise 5.25p, or 23%, today in London, bringing its price up to 28 pence.

While that's still significantly below the 116p the shares were first sold at in 2005, it's a significant boost for the company.

The reason behind the renewed life in the stock isn't because the company was able to report better-than-predicted half-year results.

The company had announced previously it had lowered its estimated earnings for 2007 after taking a significant hit to its business with the loss of U.S. customers in 2006. When the United States passed the Unlawful Internet Gambling Enforcement Act in 2006, the company was forced to pull away from what was a major part of its market.

What may have prompted the share-price rise is that PartyGaming reported the number of non-U.S. customers playing with real money had jumped 83% on its site, increasing to around 404,000 customers outside the U.S.

"The Group has delivered a solid performance in the first half of 2007 with excellent top line growth and new player sign-ups," said Mitch Garber, PartyGaming CEO. "We continue to execute our strategy through growing our player base, localization of the customer offer and broadening our product suite."

One area of growth Garber pointed out was in poker.

"In poker, new player sign-ups averaged 1,138 per day and there were on average 59,000 active players per day, generating average gross daily revenue of $854,000," he said.

The increase couldn't stop a net loss of $50.6 million in the first six months of 2007 compared to the same time last year. However, when the company stripped out the U.S. portion of its results from last year, it actually saw a 42% increase in revenue from other parts of the world.

The majority of PartyGaming's revenue is now coming from Europe, the Middle East and Africa, but the company plans to continue expanding into other parts of the world as well, with Asia being a big target.

According to Bloomberg, Garber said in a conference call that PartyGaming will open an office in Asia in the next week, despite it being a complicated environment.

"Over the coming weeks and months we expect to announce a number of further important business alliances with leading companies around the world that will help us to promote and grow our business," Garber said.

"While the important fourth quarter lies ahead, the Board remains confident about the Group's prospects for the full year."

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