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Cryptologic Q3 results down

Discussion in 'Casino Industry Discussion' started by jetset, Nov 8, 2007.

    Nov 8, 2007
  1. jetset

    jetset Ueber Meister CAG

    Senior Partner, InfoPowa News Service

    Despite move to Europe, UIGEA still hurts

    Veteran online gambling software provider Cryptologic released its quarter 3 2007 results this week, showing that although revenues were up over quarter 2 this year, the downward trend when compared to the (pre-UIGEA) Q3 last year is noticeable.

    Despite it's strategic change of focus to the European market over the last two years, Cryptologic clearly still felt the sting of the American law, which prohibits financial transactions by Americans with online gambling companies. Total revenues of $17.5 million (2006: $27.7 million) incorporated casino activities that brought in $11.4 million (2006: $16.3 million) whilst poker income was $4.8 million (2006: $8.3 million) Net income amounted to $2.4 million.

    Over the nine months to September 30 2007 the numbers show a similarly tough ride from UIGEA, which was signed into law in October last year. Total revenues of $53.3 million were achieved, compared with $85 million in the same period last year.

    On the positive side, CryptoLogic continues to have one of the industry's strongest balance sheets, ending the quarter with $85.4 million in net cash. The reduction from $91.7 million in Q2 resulted from the acquisition of the business of Casino.co.uk, a popular European gaming portal.

    "CryptoLogic strengthened every part of its business in the third quarter, and this improved our top-line revenue, our bottom-line profit and our competitive position in both Europe and Asia," said Javaid Aziz, CryptoLogic's President and CEO.

    "We unveiled new games, launched new sites, acquired new assets and strengthened CryptoLogic's relationships with some of the world's blue-chip gaming and entertainment brands. The result is new stability, profitability and sustainability for CryptoLogic's growth in the long term."

    Since its last quarterly earnings report, CryptoLogic has adapted to the changed industry landscape with a number of significant actions. These include adding new casino games and new customer sites and making acquisitions and investments in the U.K. and Asia.

    Among the highlights:

    * Launched Interpoker German site.

    * Launched Intercasino non-downloadable casinos.

    * Launched World Poker Tour's casino site.

    * Completed all technical work on Holland Casino's poker and casino sites, which are now ready to launch.

    * Launched 4 major casino games on licensee sites.

    * Launched 40 "instant play" casino games on licensee sites.

    * Secured an exclusive license to create Internet casino games based on Spider-Man and Fantastic Four, the most famous Marvel Super Heroes.

    * Introduced "Pro-View" tables in the poker room.

    * Acquired, through a subsidiary, Casino.co.uk, a popular gaming portal and related Internet casino and poker room assets - a move that has been immediately accretive to earnings.

    * Subsequent to the quarter's end, agreed to acquire an initial position in Mikoishi Studios, one of Asia's best-known game development and design companies, with particular focus on the Asian mobile phone market. CryptoLogic has the option of increasing its stake in Mikoishi in the future.

    The report reveals that throughout 2007 to date, CryptoLogic has achieved increases in revenue and decreases in operating costs (exclusive of special charges for the establishment of its new headquarters in Ireland) as the company pursues its plan to restore profitability to historic levels.

    With continued organic growth and revenue from new customer sites taking effect in the fourth quarter, CryptoLogic expects revenue between $17.5 and $18.5 million, with net earnings between $2 and $3 million.

    The current quarterly results may be the last seen from the company - in future, and in line with market trends and the practices of European public companies, the company does not intend to provide regular quarterly guidance.

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