888 Profit Rises 40%, Helped by Bingo, Backgammon

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888 Profit Rises 40%, Helped by Bingo, Backgammon

By Louisa Nesbitt

Aug. 28 (Bloomberg) -- 888 Holdings Plc, the second-largest U.K. online gambling company, said first-half profit rose 40 percent after new games spurred more bettors to open accounts.

Net income rose to $18.9 million, or 5.4 cents a share, from $13.5 million, or 3.9 cents, a year earlier, the Gibraltar- based company said today, while net gaming revenue climbed 36 percent to $131.5 million. The shares rose the most in a month in London trading.

888 introduced the 888ladies online bingo site and backgammon to boost revenue after the company lost half its sales when the U.S. barred foreign gambling Web sites in 2006. The company also added sports betting to attract customers during events such as June's Euro 2008 soccer tournament. The third quarter started in line with the company's expectations, boosted by new games and poker revenue.

``Interim results are ahead of our expectations,''' analysts including Richard Carter at Numis Securities in London said in a research note. ``We think the current valuation is too low and fails to recognize the group's increasing product diversity.'' Numis has a ``buy'' rating on the stock.

888 rose 5.75 pence, or 3.9 percent, to 152.25 pence at 9:52 a.m. in London trading and earlier added as much as 6 percent. The stock has risen 7.2 percent this year, beating the 28 percent drop by PartyGaming Plc, whose PartyPoker web site competes with 888's Pacific Poker brand. 888 has a market value of 515 million pounds.

Net gaming revenue from casino games, the main contributor, climbed 31 percent to $70.5 million, the statement shows. Poker sales advanced 2.2 percent to $41.7 million, while revenue from so-called emerging games, mostly bingo and sports betting, rose eightfold to $19.4 million.

``It has been a good first half and we see indications that the second half will be even better,'' Chief Executive Officer Gigi Levy said in a telephone interview.

888 plans to pay a first-half dividend of 2.5 cents a share, an increase of 39 percent on the prior-year payout of 1.8 cents.