PartyGaming issues profit warning
Party Poker owner PartyGaming today warned that it would not meet profits forecasts for the year after it was hit by the cost of building up its player base.
Shares in the online gaming firm slumped by as much as 11% after the group said stronger-than-expected new player sign-ups led to increased up-front costs, meaning earnings for 2007 would be "significantly below the current market expectations".
PartyGaming saw a 117% rise in sign-ups during the three months to March 31 to 233,900, compared to 108,000 in the same period last year.
However, the company added that the high numbers of new players to its sites would improve prospects for the firm from 2008.
PartyGaming has been aggressively working to build up its player base following the loss of business after it was forced to stop accepting US-based players.
Prior to the introduction of legislation which effectively banned internet gaming in the United States in October, PartyGaming historically reaped the majority of its profits and revenues from the country.
Chief executive Mitch Garber said: "Our decision to aggressively pursue new sign-ups in order to rebuild our liquidity has resulted in a substantial increase in player numbers.
"While this front-loading of marketing expense will effect our profit performance in the short-term, I believe that the prospects for the longer term will be materially enhanced."
