Since Oct. 20, shares in 888 Holdings have taken a significant downward turn relative to those of the company's listed peers. One City analyst today posited that 888's traffic levels are adequate, but customers are wagering at levels lower than anticipated.
"According to industry sources, the expected seasonal and marketing-led increase in Q4 active customers and wagering volumes has not materialized in the manner expected," James Hollins, an analyst with Daniel Stewart & Co., wrote in a research note this morning.
With third-quarter figures due out in mid November, Mr. Hollins is projecting year-on-year growth of 16 percent. Although poker is projected to be flat, casino gross win is forecast to rise 10 percent. During the first half, by comparison, poker grew 2 percent year over year, and casino, 31 percent.
A look at share value across the listed I-gaming sector yields mixed results. Since last Monday, 888 is down 33 percent; PartyGaming is down 11 percent; Bwin Interactive Entertainment A.G. is down 6.9 percent; and Playtech Ltd. is up 4.9 percent.
While 888's shares are trading at an all-time low of 79 pence, the company still stands to gain both top- and bottom-line growth from business-to-business deals -- the projected value of which are, by rules, not included in analyst forecasts.
"[B-to-b] would be one of the quickest areas for growth," Gigi Levy, the company's chief executive, said in a September interview with IGamingNews. "What I like about it is that in most cases, it's not only revenue growth, it's also profit growth.
"Because clearly it's all on the same infrastructure as the b-to-c side of the business," he continued, "which means we're not creating a new, from-scratch b-to-b company, we are actually working on the same infrastructure as we had before. From that perspective, I don't think there's any other thing that could be as beneficial to our strategy."
Mr. Levy, who declined to quantify the licensee pipeline but called it "very healthy," has also been trumpeting the benefits of sharing poker tournament liquidity.
The first such deal is expected before yearend between CryptoLogic Ltd. and a party whose identity has yet to be leaked. Financial sources have told IGN that Boss Media A.B. and 888 are possible candidates, though eGaming Review has suggested it could be PartyGaming.
Looking ahead to yearend, Mr. Hollins has trimmed his forecast on poker, casino and total gross win back by 4.9 percent, 5.6 percent and 6.2 percent to $79.2 million, $136.5 million and $265 million, respectively.
is the editor of IGamingNews. He lives in St. Louis, Mo.