THE FOOL GIVES CRYPTOLOGIC STOCK ANOTHER BOOST

12 January 2007

Turnkey provider has weathered the UIEGA storm well, says respected investment writer

The respected investment writer for the popular Motley Fool site, Tim Hanson gave turnkey provider Cryptologic a gold star this week for weathering American legislative storms successfully.

Three months ago, investors were fleeing CryptoLogic, the author writes. Congress had just passed the "Unlawful Internet Gambling Enforcement Act of 2006" - outlawing Internet gambling financial transactions in the United States.

"For a small company whose sole business is supplying software for online games, this was bad, bad news," opines Hanson. "Investors responded by dropping CryptoLogic's stock 30 percent in a day.

"And while we can all agree that a U.S. ban on Internet gambling wasn't a positive development for CryptoLogic, was a 30 percent haircut warranted? After all, CryptoLogic derived less than half its revenue from the United States, and it wasn't relying on our country to spur future growth."

Hanson goes on to outline the ups and downs of investment, particularly in the context of short term dangers and events that are in general beyond normal control, giving examples of American companies that have had to face threats of this nature, and their resilience.

He opines that these kinds of events happen all the time in public markets, and fear sends investors fleeing. "Yet small companies with qualified management, sound financials, and conservative growth plans often cope and succeed. And when they do, these small companies see their shares come rocketing back to life," Hanson writes. ".....it seems to be what's starting to happen at CryptoLogic. These, in short, are the times you must buy."

CryptoLogic is inking deals with new clients, including Playboy, and continues to post fine financial results. While investors seemed to believe CryptoLogic was doomed just three months back, the reality to date has been quite different. The stock has recovered some 40 percent since its early October lows, and cash still accounts for more than one-third of the company's market cap.

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