PartyGaming Rebounds After Skins Split

PartyGaming, owner of the internet’s largest online poker room, Party Poker, saw its shares (PRTY.L) jump 10% today after it announced that its strategic split with its partners, or “skins,” had resulted in increased poker growth. PartyGaming’s stock had been battered in the last month, losing half their value, after the company warned that future growth would not be as fast as it had been.

PartyGaming’s share price rose to almost 90p at its peak today before closing at 86p, up from Thursday’s close of 78p. The stock had been as high as 179.5p back in July.

Third quarter revenues increased 32% to $220 million, helped by a 10% lift in poker revenues resulting from the split from the skins. The impact of the addition of blackjack and side bets to the poker software, has also, according to CEO Richard Segal, been “material and immediate." Other casino games will reportedly be added at a later date.

Segal is pleased with recent results, as he told reporters:
"The pick-up post-split is in line with our expectations, and it's not even two weeks since the platform split occurred," he said, adding, “We have seen some players coming across... but we would expect a seasonal pick-up as we come into the longer winter months."

The overall number of customers, measured by PartyGaming as total active player days, increased 53% from the same quarter last year, to 12.2 million during 3Q 2005.

Analysts also feel good about the firm’s recent results. In a research note, Citigroup analysts wrote:

"This should provoke some relief and dispels the worst fears short-term. We remain bullish that management have [sic] the tools to re-stimulate growth."
Empire Online (EOL.L), owner of Empire Poker, one of the former Party skins, on the other hand, has not fared quite as well since the split. It warned earlier this week that it expects net profit to fall 10% short of expectations. This not only put a dent in its stock price, but dragged other online gaming shares down with it.

Originally published October 21, 2005