Party Gaming Plc Tanks
How Can That Be?

Wednesday, September 7th, 2005

PartyGaming Plc, the online poker operator which this year sold stock worth $1.9 billion in an initial share offering, said first-half profit increased 25 percent, but now has suffered a 33% tumble in its stock after the company made comments suggesting a slow-down in customer growth?

".... the online gaming market and poker in particular continues to show strong year-on-year growth, the rate of growth is continuing to (be) moderate," said CEO Richard Segal.

After Segal made such comments, analysts were quick to drop their outlooks for the company and the industry as a whole. Reuters reports:

Segal said an expected upturn during the third quarter appeared to be coming later and less strongly than expected, and this might have been caused by a delay to the televised World Series Of Poker.

Rival Cassava Enterprises said it was still going ahead with plans to float its online casino 888, despite PartyGaming's troubles, and stressed the differences between the two businesses.

"We're far less exposed to the United States -- around 55 percent, compared to 86 percent for them," said an 888 spokesman.

PartyGaming owns such popular sites as PartyPoker and StarluckCasino. The company makes most of its money from online poker, so it will be interesting to see if it picks back up for them, or if they will have to find an alternative for their main source of income.