iPoker Parent Company Issues Profit Warning

While iPoker reports mixed results (up 17.8 percent year-on-year but down 6.4 percent on the previous quarter), parent company Playtech appears to have issued a profit warning based on its key performance indicators for the second quarter of 2009.

Gross income for the quarter rose 23.3 percent to €33.1 million from the €26.9 million reported in the second quarter of 2008, but that figure is 1.9 percent less than the €33.8 million achieved in the first quarter of this year. Casino revenues decreased quarter-on quarter and year-on-year, and although poker revenues increased from €7 million in the second quarter of 2008 to €8.2 million in the second quarter of 2009, there has been a decrease of 6.4 percent since the last quarter, based on the €8.8 million achieved in the first quarter of 2009.

The company reports positive news and feedback of its William Hill Online (WHO) business, and recent license agreements including its integration with the Serbian Lottery platform, where it will provide casino and poker products in the Serbian language, customised for local appeal.

Playtech reports that its WHO business is making good progress after a “prolonged integration period and difficult trading conditions”. Therefore, these new agreements are expected to produce additional revenue in the coming months.

The company has announced that full year trading will be below current market expectations, and has reduced its existing forecast for the full year 2009 by 20 percent from €120.6 million to €96.5 million. Its reasons for this are WHO’s slow start and the “general challenging economic environment”.

Daniel Stewart & Co analysts believe the shares, which fell yesterday by 24 percent, are still value and yesterday’s run was likely an “overreaction”.

Nevertheless the company has dropped its price target saying, “Although we expect the company to benefit from a full-year of postintegrated WHO, the burgeoning Italian poker market, and new licensees in FY10E [full year 2010 estimate], we feel it prudent to drop our FY10E EPS [full year 2010 estimated earnings per share] by 20 percent, with our price target dropping accordingly from 620p to 496p.”

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