$2.88 Trillion Lost Since March 2000
According to an article in the Wall Street Journal, investors have lost more than $2.88 trillion since the Nasdaq soared to its highest point in March 2000. Of the companies trading on the Nasdaq, the WSJ, which obtained its figures from a study by Bianco Research LLC, said that 20 firms were responsible for 76 percent of those losses, while nearly all of the 20 top loss-inducers were from the technology or telecommunications sectors. Cisco Systems Inc. alone cost investors $209 billion. Jim Bianco, the author of the study, commented, "If you take tech and telecom out of the market, you're still left with 75 percent of the market capitalization of U.S. stocks--and those stocks never came close to a bear market and are now on the verge of an all-time high."
Internet Market Segment Sags
Last year the Deutsche Börse introduced 10 sector sub-indices on the Neuer Market that helped investors track separate industries of the new technology segment. The Internet segment has been the worst
performer of all. FT.com reports that for the first four months of this year, the Internet segment has under-performed the Nemax All-Share index by 10 percent. On the other hand, this segment had the highest market capitalization among all the sub-indices in December 2000, despite having a 10-month sell-off.
In December the Internet segment was valued at €33.4 billion, or one-quarter of the market's entire capitalization. Since the end of April, however, the segment has dipped to third-place and now represents about 18 percent of the market's capitalization.
£17 Million Raised by UK Gaming Firms
British betting firms are taking to the Internet in a big way, something that requires deep pockets. The efforts of two firms to develop new online casinos and sports sites have company officials attempting to raise £17 million through new share issues, reports NMA.
Last week, the AIM-listed company Gaming Investments (GVI) announced that it was raising £5 million as part of a reverse-merger to become Aspinalls Online. As part of its new focus, the company purchased C3i, adding C3i's two e-casinos, Ccasino.com and Astracasino.com to Aspinalls' list of online properties.
At the same time, Gaming Internet (GIN), another AIM-listed company known primarily for its three entertainment sites (zapcasino.com, Racing-Network.co.uk and SportsMAD.com) and myriad cross-marketing deals, is looking to raise a huge chunk of change--reportedly between £8 million and £12 million--mainly to bankroll its new greyhound racing site. The site, gobarkingmad.com, has netted a deal giving GI the digital media rights to 66 tracks in 10 nations, covering 20 percent of all greyhound races in the world. As a result, GI will soon be able to offer punters a new greyhound race every five minutes, and eventually will enable punters to bet online on races at the gobarkingmad.com site. The site is expected to launch next month, with betting services coming soon thereafter. Content will be in English and Cantonese to begin with, with other languages following later.
Zetters Reports Pre-Tax Losses of £1.5 Million
Despite the positive outlook for the U.K. betting industry, not all British bookmakers are whistling happy tunes. When entrepreneur Tony Wollenberg was brought in last year to run football pools firm Zetters (ZTTR.L), his first move was to acquire IFX, a foreign exchange company, and turn Zetters into a new type of company that offers financial and spread betting services. Despite his best efforts, however, the company is reporting £1.5 million in pre-tax losses. Wollenberg remains optimistic that Zetters will be a successful entrant to the U.K. spread betting industry, telling The Telegraph, "Companies such as Cantors have done a brilliant job at expanding the market." Zetters' brokers, meanwhile, are estimating pretax losses of £3.5 million in 2002.
Coral Sings a Sad Song Too
Britain's third largest bookmaker is reporting heavy losses once again. Based on figures for the quarter ending April 8, Coral showed turnover was up 8 percent while gross profits were up roughly 6 percent. Nevertheless, Coral had net losses during the same period of £19.4 million, up 133 percent for the same period last year. Last September, Coral reported extraordinary losses of £52.6 million.
Most of the company's losses have been attributed to marketing and development costs for the company's Internet betting services, which last year had cost the company £19.1 million. Coral reported that the Eurobet Internet site brought in £264 million in turnover yet had a second quarter decrease of 13 percent thanks to large payouts made to clients in the Far East.
"We are particularly pleased with the performance of our Coral business against a continued backdrop of adverse weather conditions and the outbreak of foot and mouth disease in our second quarter," CEO Bob Scott said in the company's statement to the SEC. "We continue to enjoy considerable growth within our Internet business at Eurobet. Our U.K. site is continuing to show substantial progress and has exceeded both our growth and profitability criteria."
In addition, Scott said the Eurobet site will leave Gibraltar when the U.K. government drops its betting duty. "We anticipate that the introduction of tax-free betting will be hugely welcomed by our customers, and will be a major driver on our business in the future," he said.
Alphameric Sees Slump Thanks to Delay
Last Monday, shares of wagering technology firm Alphameric (ALM.L) plummeted more than 42 percent after the company warned that its financial results, to be released July 4, would be lower than expected. The blame was placed on the delay in releasing a customers' implementation program for Alphabet, the company's new bet capture and settlement system. Alphameric provides betting firms with bet capture and television display systems used for telecom and Internet technology. Share prices continued to slump after closing at 140 pence last Monday. Shares closed today at 125 pence.
Youbet Will Be (Almost) Delisted
Youbet.com (UBET) reports that it has received a letter of determination from Nasdaq informing the company that it had failed to comply with the minimum bid price requirements for continued listing as set forth in the Nasdaq's Marketplace Rule 4310(c)(8)(B). In light of Youbet's recently announced strategic relationship with TVG, the company has requested a hearing to review the Nasdaq decision. (News of the partnership has driven the company's stock price above the $1 minimum price required by the Nasdaq.) The request has stayed the Nasdaq delistment for the interim.
CryptoLogic Remains Positive
Officials with software supplier CryptoLogic Inc. (CRY) forecast strong performance in upcoming months. "This year's revenue growth and net margin targets remain solidly on track and consistent with market expectations," commented Jean Noelting, Crypto's CEO and chairman. "As expected, interest
income will be reduced significantly reflecting lower interest rates and lower invested capital due to our share repurchase."
Noelting added, "Cryptologic will continue to see strong performance in 2002 as we benefit from new licensees, acquisitions and expansion into new gaming verticals. We continue to believe that our focus on large, brand name customers, regulatory compliance and proven financial track record will help us realize our vision to be the leading global provider in e-gaming areas."
CrypLologic released the following fiscal and quarter targets for 2001:
The company maintains its guidance for 20 percent revenue growth and 45 percent net margins for the full year of 2001. As has been the historical pattern, the first and fourth quarters will post the strongest performance and the middle quarters will reflect Internet seasonality.
- Fiscal 2001: Revenue ranging between US$41.0-$42.0 million; net income ranging between US$19.0-$20.0 million.
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- Second quarter 2001: Revenue between US$9.5-$10.0 million; net income between US$4.2-$4.6 million.
- Third quarter 2001: Revenue between US$9.7-$10.2 million; net income between US$4.2-$4.6 million.
- Fourth quarter 2001: Revenue between US$10.8-$11.3 million; net income between US$5.4-$5.9 million.
- Interest income for fiscal 2001: Due to the buy back in 2001, the company bought back approximately 1.5 million shares to date at a cost of US$13.4 million and lower than anticipated interest rates, interest income for the year is expected to be between US$2.3million to $2.5 million, a decline of US$1.7
million versus earlier projection.
- Cash position for fiscal 2001: The company expects to generate approximately US$5.0 million in free cash flow each quarter, which would see 2001 end with approximately US$65 million in total cash, not accounting for any further share buy back and acquisition activity.
- Total expenses for fiscal 2001: The company has accelerated its plans for regulatory compliance as well as enhancing the management team. The company will invest another US$750,000 this year. Expenses are expected to amount to US$21.0-$23.0 million.
- Fully diluted shares outstanding for fiscal 2001 are expected to increase from 15.7 million to about 16.0 million shares, excluding acquisition and share buy back activities.
- For the year, the company expects to sign 4 new major licensees, deploy its strong cash reserves to make at least one acquisition and expand into at least one new gaming vertical.
Plus, Crypto released the following fiscal 2002 targets:
- With the contribution of new licensees, acquisitions and entry into new gaming verticals in 2001, Cryptologic is comfortable with targets of 25 percent revenue growth and 45 percent net margins in fiscal 2002.
The SUBWAY.com Announces Investment Opinions
The SUBWAY.com released investment opinions on two I-gaming companies:
- For Total Entertainment (TTLN), The SUBWAY recommends "accumulate" on the company's shares, which had recently closed up 27 percent at $0.29 on 2,302,300 volume.
- For Youbet.com (UBET), The SUBWAY recommends "attractive" on the company's shares, which recently closed up 81 percent at $1.36 on 3,138,600 volume.