By Bob Pajich
Empire Online's announcement that online poker growth has been flat for the last three months overshadowed the company's strong showing for the third quarter this year. The announcement - along with PartyGaming's decision to stop allowing Empire Online's Empire Poker to run as a "skin" to PartyPoker.com - caused the company's stock to drop from 183p (pence) on Friday, Oct. 7, to 111p at today's close.
In fact, Empire Online recorded $42 million in revenue for the first six months of 2005, up $25 million from the same period last year and $11 million from the previous six months. The gross profit for the site for the first six months was $21 million, which is up from $8.6 million.
But ever since a PartyGaming auditor announced in early September that it expects online poker to remain stagnant in the next few months, many investors - who happily climbed aboard online gaming industry's bandwagon this summer when several sites went public on London's Stock Exchange - turned wary.
And it's the poker sites that are taking the biggest hit.
PartyGaming, the company that runs PartyPoker.com, PartyCasino.com, and PartyBingo.com, saw its shares start at 129p and climb all the way up to 176p in late July, before plummeting 51.75p to 105p Monday, Sept. 5. During the next few weeks, its shares wobbled to a low of 71.5p before making a small recovery to 78.5p at yesterday's bell.
Empire Online lost 34 percent of its worth this week when shares fell all the way to 102p, before swinging back to 111p yesterday. Shares peaked the morning of Sept. 5, at 183p, but fell to 252p by the close of the day. That was the day PartyGaming reported a three-month lull in new sign-ups. Two weeks later, Empire Poker lost another 51.5p when it hit 202.5p.
Cassava Enterprises, the company that runs 888.com, peaked the day it launched its IPO at 175p. It has been on a steady decline ever since, hitting 143p earlier this week, before making a small recovery to 151.75 at the end of
yesterday.
It's not known how PartyGaming's decision to not allow other sites to use its platform will affect traffic at PartyPoker.com or its "skins." It looks like PartyGaming is ending its relationship with "skins" to try to remain unique in the crowded online poker field.
PartyGaming recently launched two new gambling features on its PartyPoker.com - blackjack and an option to bet on the flop - and by making the move to end its relationship with "skins," these features will remain a PartyPoker.com
exclusive.
