SPANISH AND ITALIAN LICENSEES FOR PLAYTECH

11 January 2008

Online gambling provider intends to pursue an aggressive acquisition strategy


Playtech spokesmen were in a bullish mood in an interview with the Financial Times this week, revealing that the online gambling software company plans an “aggressive” acquisition strategy after enjoying strong growth towards the end of last year.

The spokesman commented that the firm's European Championship of Online Poker held in December, its largest event, awarded $2.5 million (GBP 1.26 million) in guaranteed prizes and helped monthly sales reach a “record level”.

Playtech is in talks to sign licensees in the Spanish and Italian markets for the first time, the spokesman revealed, and a service signed with one of the largest [and still unidentified] Asia-facing online gaming operators will be launched by the end of the first quarter. It is understood a further licensee agreement with a separate Asian operator will be announced after approval from regulators.

Unusually for a software company, Playtech takes a percentage cut of licensee revenue. Yet analysts point out it faces price pressure from rivals, which include Microgaming, a privately owned counterpart of a similar size, and smaller developers such as CryptoLogic, reports the FT.

Despite this, the company maintained it was “highly confident” of the new year.

Numis analyst Richard Carter has maintained his Playtech forecast for 2008 unchanged but said he may increase it between 10 and 15 percent if “current trading momentum is maintained”. He described Playtech as a “best in class operator” but noted its dependence on just 10 licensees.

The company said it was confident that it would meet analysts’ estimates for 2007. Pre-tax profits are expected to be $68.8 million on sales of $102.8 million.

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