Pacific Poker Parent Profits PlungeTweet Share
After a statement by 888 Holdings warned of “significantly lower” earnings against market expectations, the online gaming operator and parent company of Pacific Poker and 888poker saw a decrease of 18 percent in its stock price on the UK stock market today.
The company’s profits have been especially hard-hit with declining ring game participation at both its 888 Poker and Pacific Poker sites. Although the industry as a whole has experienced an increase of 9 percent for the year, 888poker has seen nearly an 18 percent drop over the same period of time.
Although still making profit, company management also cites weakening in the Euro and the Sterling as a factor in its decline. An estimate suggests that if the exchange rate with the US dollar had stayed at January levels, the company would have realized an additional $1.9 million in profits. For the year, the company has lost nearly $5 million in currency exchange transactions.
The 888 Holdings boards announced, “The board has revised its outlook for the remainder of the year and now expects profit to be significantly lower than previous market expectations.” The statement continued, “A number of steps, including cost cutting, have already been implemented and the board remains confident about the future strategy and prospects.”
One problem experienced by the company is its position in the online poker market. Daniel Stewart & Co. analyst James Hollins said he views the group’s current weakness as company-specific and not an indictment of the industry. Hollins notes that 888poker has a “weak poker offering” when compared to sites like PokerStars, Full Tilt, Party Poker and others, and that its casino depends too heavily on high-rollers.
As the poker market continues to recover from the economic crisis that has plagued the world market for nearly three years, analysts will continue to watch the efforts by 888 Holdings to turn around its disappointing news.