Saturday, September 3, 2011

888 notes

Some notes about what people have been saying about 888:
  • the fact good news can't lift it means when the market weakens yet again which it will, 888 will head lower.
  • has no major city interest
  • Excellent results, 888 are slowly but surely repairing the numerious mistakes that crook Levy made. 
  • The cost of trying to keep up with the big boy is astonishing, and will be repeated in every new market that opens. Future taxation changes and potential US liabilities make anybody staying here very brave. I was out earlier this month, and far happier for it. Profit, or realistic future profit, are everything. Increased figures purely through other sites closing because they were operating illegaly aren't any great achievement. The board certainly shouldn't take any credit for it. Invest in a quality board elsewhere and reap the benefits, in my view. 
  • I am patient and believe the share price will double in 12months / would be extremely surpised not to see a firm offer at around 80p before this 12months is out anyway. Likely will be from BPTY, Playtech or Caesers, but we will see. If you take Ladbrokes debacle away and put the share price at 45p during that crazy 6months 888 are down but not much more than many many other shares, including BPTY that have lost far more value.
  • I don't see why they [Playtech] wouldn't go for 888, as obviously the Ladbrokes offer was too low. 888 has great technology and has the fastest growing traffic numbers over the last year.
Gigi Levy received a settlement of $3.9m from 888 following his resignation as CEO in April 2011, although he has stayed on an a non-exec director.  (FT article). His board seat is crucial in preventing an immediate payment to the vendors of Wink Bingo. (Telegraph). Daniel Stewart sees a risk of the UK imposing a remote gambling tax, which could be as high as 35% of EBITDA on 2013, and hence is a seller of the stock.

For the half-year just ended, 888 had an EBITDA of $20m. With depreciation of $7.1m. That gives it an EBIT $12.9m for the half year, which annualises to $25m, or about £15m. This gives 888 an unleveraged earnings yield of 22% (15 / (105 mkt cap - 38 net cash)). That's very high. Let's say the gaming tax takes effect, and that 888 can now only earn 65% of that. That gives it a yield of  14% (0.65 x 22).

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