bwin Shares Dip 11 Percent on Q3 Trading Update

15 November 2007

Shares in bwin dipped 11 percent in Vienna today on the release of the company's third-quarter trading update.

The company reduced net loss by 77 percent to 5.1 million euros from 22.6 million euros during the previous-year period, and gross gaming revenue was up 20 percent to 86.2 million euros, excluding U.S. and Turkish operations. The company left the United States in 2006 after the Unlawful Internet Gambling Enforcement Act was enacted, Turkey, in March.

"bwin has not made the profit some people were waiting for," Wolfgang Matejka, chief investment officer at Meinl Bank in Vienna, told Bloomberg.

Christine Reitsamer, an analyst with Sal. Oppenheim, said that the high-profile Austrian operator has not been able to show profitable growth and gave its shares a neutral rating.

The group reported 827,000 active real-money customers, down 11 percent against the previous year but up 9 percent against the second quarter.

Improved sports betting margins, narrowed 0.7 percent to 8.5 percent, fell within bwin's full-year forecast of between 8 percent and 10 percent. Quarter on quarter, EBITDA grew 53 percent to 15.2 million, which the company attributed to the improvement in margins.

"We are optimistic that we will stay within the 8 to 10 percent bandwidth for the full year," said co-Chief Executive Norbert Teufelberger.

Teufelberger said that in the coming weeks, the group will shortlist three to four countries for its planned market entry into Asia.

With regard to recent European legal development, particularly in France, Teufelberger commented: "Who would have thought six months ago that France would move politically? There is movement now."

Teufelberger added that the group will aim for fourth-quarter gross gaming revenue on the level of its record quarters last year, when it reached around 97 million euros.