Investors Corner (Dec. 3-7)

Zetters (ZTTR.L) last week warned that its aggregate profit for the year is likely to be lower than market expectations. The online betting and gaming company blamed the gloomy forecast on acquisitions and diminished trading since Sept. 11 on its IFX business.

IFX is a financial market maker and spread betting software developer; it was bought by Zetters last year for £20.4 million. The financial betting business made £485,000 for its parent company in the first two quarters to Sept. 30, but lost £92,000 on its trading options desk. Zetters has since closed the desk and is focusing on using its trading platforms and infrastructure.

IFX suffered business losses since Sept. 11, with October reaching an all-time low. Since then, Zetters said, the company's performance has improved, although by not as much as had been expected.

Zetters is reporting a pre-tax profit of £510,000 before amortization and exceptional items and turnover of £7.8 million--twice the amount for the same period last year. The company focused on pools before 2000, when it shifted its concentration to online betting.

Casino, Hotel Stocks Show Signs of Recovery

Stocks in U.S. hotels and casinos recovered to the point of pre-Sept. 11 levels this week, Reuters reported Thursday.

Share prices sunk as much as 40 percent in September as travel froze due to the terrorist attacks on the World Trade Center and the Pentagon. Smith Travel Research on Wednesday said U.S. hotel room revenue was down 14.1 percent last week. In the month before that, room revenue appeared stagnant at 17-19 percent lower than last year, causing some analysts to conclude that the industry's recovery had reached a halt.

On Thursday, MGM Mirage (MGG) was up 90 cents to $28.10, just slightly lower than its Sept. 10 closing price of $28.31 per share. Mandalay Resort Group (MBG) rose 47 cents to $22.97; its Sept. 10 closing price was $23.90. Park Place Entertainment Corp. (PPE) increased by 5 cents to $8.74, compared with its Sept. 10 close of $9,92. Harrah's Entertainment Inc. (HET) was up $1.26 to $34.27; on Sept. 10 it closed at $28.71.

Following MGM Mirage's recent market gains, investment bank Lehman Brothers upgraded its rating of the hotel and casino operator from to "buy" from "market perform." Analyst Joyce Minor said the company's earnings estimate of 5 cents per share is reachable. Lehman's 12-month price target for the company is $33.

IG Index Lowers First-Half Outlook

Shares of spread-betting firm IG Index fell 10 percent on Wednesday after the company reported first-half results would be lower that market expectations.

IG expected to make a pre-tax profit of £8.3 million for the first half, which ended Nov. 30, but growth in trading slowed during the last few months. The profit forecast would have been a 14 percent increase from the £7.33 million made during the same period last year.

The Financial Times of London calls IG's slowdown a surprise, considering that since Sept. 11, most financial spread betting firms have had increased business as investors avoid traditional markets.

"Times are appalling for stockbrokers, but they are very good for us," said Stuart Wheeler, the founder of IG.

GTECH Profits Up

GTECH Holdings Corp. (GTK) upped its fiscal third-quarter profits by 18 percent with the sale of lottery terminals and software to the United Kingdom's national lottery, which is operated by Camelot.

The company's net income increased by 73 cents per share to $21.6 million in the three months ended Nov. 24. During the corresponding period last year, net income was $18.3 million or 53 cents per share. Revenue rose to $263.6 million from $221 million.

The lottery system operator said it expects fourth-quarter revenue to be up 9 to 10 percent from one year ago and earnings to be on track with expectations of 81 to 86 cents per share.

GTECH also said this week that its board of directors has authorized a share buyback worth $75 million that lasts through February 2003, which will join the shares worth $16 million that are still to be bought back through its previous buyback, which lasts until June 30, 2002.

Report Released

365 Corporation plc (TSF.L) released its second quarter results for the period ending Sept. 30. Martin Turner, CEO, followed the release with a statement about the reorganization of the company's business to turn the business into a profitable, growing company. Turnover was up 28 percent for the first half, to £28.2 million from £22.0 million, and restructuring and other one-off charges amounted to £1.9 million, which includes funding for cost-reduction programs.