LONDON, March 30 (Reuters) - Online gaming firm 888 (888.L) said it was in talks with over 50 potential strategic partners on Monday as it looked to expand its business-to-business activities to offset tougher trading in its consumer division.
888 reported better-than-expected 2008 results but said first-quarter revenue was expected to be slightly lower than the fourth quarter as the broader economic climate remained challenging, sending its shares lower.
Chief Executive Gigi Levy told Reuters the company is focusing on the expansion of its business-to-business division, which takes 888's existing software and infrastructure and provides those services to third parties.
"If you're just doing business-to-consumer in a recession, that's going to be challenging. The business-to-business side gives us the ability to grow market share even if the overall market doesn't grow," CEO Gigi Levy told Reuters.
Levy expects the company to announce more agreements in the second quarter and to exceed the 14 business-to-business deals agreed in 2008 in the current year.
"We have a pipeline of more than 50 additional deals. A few of them are household names and a few are prominent players in online gaming that are using somebody else's services today.
"There are a few deals out there that could mean immediately a few million dollars to the bottom line. It's not transformational but it's very enhancing," Levy said.
888 announced a deal with Britain's biggest horseracing publication, the Racing Post, on Monday, its fourth strategic partnership agreement so far this year.
The company will provide the Racing Post with an online gaming operation, including customer support and payment processing services and Levy said he expects the transaction to be earnings enhancing this year.
BETTER-THAN-EXPECTED EARNINGS
888 reported a 23 percent rise in 2008 earnings before interest, tax, and depreciation (EBITDA) to $55.7 million.
That was ahead of the consensus market forecast which had stood at $53.7 million, according to a poll of seven analysts supplied by the company.
Shares in 888, which have lost over a quarter of their value over the last six months, had fallen by 6.4 percent to 105.25 pence at 1225 GMT.
Daniel Stewart analyst James Hollins said current trading was behind its expectations, raising questions over trading in the consumer division. He also said the full year dividend of 2.9 cents was below his 4.3 cents forecast.
Levy said 888 was also in discussions over possible acquisitions and expected to complete a purchase during 2009.
"The prices used to be very high around a year ago and now they're willing to sell for very low multiples. We're definitely going to take advantage of this. I would very much hope to see a deal done in the remainder of the year," he said.
Levy said 888 has cash of around $65 million, excluding customer money, and could spend around half of that on an acquisition if the right opportunity arose.
The company remains in discussions with the Department of Justice over a possible settlement in relation to its activities in the United States prior to legislation being passed in October 2006 effectively outlawing the industry.
"We want to be in a good position to take some of the U.S. market back if it re-opens," said Levy.
source: http://www.reuters.com/
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