888 Says Operating Income Advances on Poker; Talks With Ladbrokes Continue
888 Holdings Plc, a U.K.-listed Internet gambling company that supplies services to Caesars Entertainment Corp., said talks with Ladbrokes Plc continue, and fourth-quarter operating income gained 5 percent over the year- earlier period.
Operating income in the period was $71.3 million, the Gibraltar-based company said in a statement. Talks continue with Ladbrokes, a U.K. bookmaker, the company said, after the Mail on Sunday said yesterday Ladbrokes might walk away because a bid was rejected as too low.
Poker income rebounded from a slump earlier last year as the company started an advertising campaign in July directed at casual players, Levy said. 888 said bingo income more than quadrupled to $14.1 million, as Wink Bingo, acquired in Dec. 2009, exceeded forecasts, the company said.
“There’s still interest on both sides,” Chief Executive Officer Gigi Levy said of the Ladbrokes talks in an interview. “Our current numbers only make us more appealing.”
888 rose 0.75 pence, or 1.7 percent, to 44.5 pence at the 4:30 p.m. close in London. The shares have declined 57 percent over the past 12 months, giving the company a market value of 153.7 million pounds ($248 million).
888 said it expects earnings before interest, tax, depreciation and amortization for the full year to meet analysts’ estimates.
Bingo income rose as the company added six instant games, the company said. Wink Bingo did so well its “earn out” payments, or an arrangement where the sellers of a business receive extra future payment, will be at the “upper end,” the company said.
888 said it is in “advanced discussions” with Wink Bingo vendors over the timing and structure of the payments.
The payments could be as much as 48 million pounds, which compares with 888’s gross cash position of $67 million, according to Nick Batram, an analyst with Peel Hunt.
“We believe that the most likely outcome is a restructuring of the earn-out as opposed to an equity fund raising,” Batram wrote in a note to investors. He has a “sell” rating on the shares. “Either way it is another factor that suggests 888 is not in a position of strength when negotiating a sale of the business.”
Poker operating income recovered to $10.6 million, from $8 million in last year’s second quarter, the company said.
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