By Tom Griggs in London
October 10, 2005 - The slowdown of growth in internet poker did not appear to have affected Empire Online which on Monday said that revenues jumped 71 per cent in the third quarter.
However, investors were not impressed after Noam Lanir, chief executive, said that there was little growth in the sector during the period and Empire's shares slumped 18 per cent to 150½p.
In a separate announcement, PartyGaming indicated trading could get tougher for its smaller rivals. The world's largest online poker operator unveiled a change to its operating platform that would separate its own players from those from other companies, such as Empire. The new system will allow its customers to play a range of different games in addition to poker on the same platform.
The change was welcomed by Empire which said that its EmpireOnline.com site would be enhanced by the inclusion of new features provided by PartyGaming.
However, Charles Wilson, analyst at Bridgewell Securities, said: "The move towards proprietary systems will cut off liquidity for skins, which has been one of the key drivers of traffic."
Investors, already jittery following a warning from PartyGaming over growth prospects and a flat listing by 888.com in September, pushed shares for the whole sector lower on Monday. PartyGaming shares fell 6.9 per cent to 74½p, Sportingbet fell 5.9 per cent to 288½p and 888 Holdings fell 2.8 per cent to 156¾p.
But Mr Lanir sought to reassure Empire investors about the prospects for the group. "In a period where there has been much uncertainty over potential growth rates in the online gaming industry as a whole we believe our results demonstrate the strength of our core marketing skills."
Empire said that the number of real money players increased 62 per cent to 53,148 compared to last year, a jump of 24 per cent compared to the second quarter. Net revenues from gaming leapt from $18.3m in the third quarter last year to $31.4m in the same quarter this year, an increase of 24 per cent from the previous quarter.
The group, which ended talks with Sportingbet over a £791m takeover at the end of September, estimated that operating profits for the quarter would be $16.1m, a rise of 43 per cent compared to $11.3m last year. It said that over 40 per cent of the new real money players had come through its own platforms, Noble Poker and Club Dice, which it acquired over the summer.
Last month, PartyGaming, the world's largest internet gambling group, saw its shares fall by a third when it said that customer growth had slowed while player retention rates and player yields had declined at rates "greater than expected", prompting fears that the online poker fad had come to an end.
However, analysts at Altium Securities, said that Empire's results demonstrated that "the majority of PartyGaming's woes are company specific".
Mr Lanir attributed Empire's success to its diversification strategy of directing new players to its own platforms, such as Noble Poker, and away from so-called "skins" such as EmpirePoker.com which uses PartyGaming technology.
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