Bwin.party Expecting Full Year Revenue Drop Of Up To 17%
Bwin.party has announced that they are expecting full-year revenues to fall up to 17%. While this may sound bad, they have adopted the approach of cutting their losses in less profitable markets and focusing on markets that can yield them higher quality players.
One of the main focuses of Bwin.party is that of the US online gambling market which as we reported will see Bwin.party partner up with ventures in Nevada and in New Jersey where they plan to launch real money poker and casino games.
Some of the reasons for their revenues drop are problematic markets like Greece which was hit hard by the decision of internet service provider’s unexpectedly blocking online gambling sites. Competition in the bingo market in Italy and Britain were also a reason for the drop.
As we said Bwin.party is looking to make their business model a lean and mean machine and by sacrificing expanding into difficult markets has naturally led to less revenues. Chief executive Norbert Teufelberger explained that the results were expected to drop as a result of the company’s new business model,” This was always going to be a major year of transition for us.. however, our performance and revenue is behind where we expected it to be at this point.”
Analysts like Ivor Jones of Numis seemed to understand that the results merely represent a business in transition and not in decline. He said,” These forecast downgrades reflect the unpredictability of a business in transition, and of regulatory action.” He also retained his recommendation of ‘buy” for the stock reflecting his belief that bwin.party will show growth in the US and other markets. The coming World Cup in 2014 is also seen as a growth opportunity for gaming companies like bwin.party.Cost cutting is also set to add to revenues with over €70 million expected this year. The half-year dividend was increased by 5% to 1.80 pence per share.