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Wednesday, June 15, 2005

PartyGaming pending FTSE IPO illustrates the power of internet IPOs

There is a new breed of businesses popping up that are demonstrating the power of distributed consumer applications. One we've already seen blow investors' minds is Google. You can read my previous ponderings them elsewhere in this blog. One you may not have seen yet, but you will be hearing a lot about in the near future is PartyGaming, the company that runs PartyPoker.com. This article illustrates the speed and profitability that these companies spring up. PartyGaming recently set its IPO price on the FTSE.
It's clear that the Internet represents a new medium which is just now beginning to be appreciated and companies like PartyGaming and Google have come from nowhere within a few years to rival the biggest old economy companies in terms of valuation.
This is a big deal and represents a seachange for equity investment opportunities. Staying in front of this trend will help an investor tremendously.
Key observations from the article:
  • Growth Metrics: In three years PartyGaming's pre-tax profits have jumped from $5.8m to $89.2m to $372m. In the first three months of this year it made $125m. Huge and real growth. Like Google, everyone will trash-talk this IPO until it continually beats their expectations over the next year.
  • Poker as a trend: PartyGaming and its rivals make their money by taking a small slice - the "rake" - from each hand of poker they host for real money. The rake is typically only 1% or 2% of the pot, but a dollar here and a dollar there add up. More than 70,000 people regularly play simultaneously at PartyPoker and the site has captured half the market.
  • Globalization: PartyGaming's head office is in Gibraltar; its computer servers run from there and from Kahnawake, a Mohawk Indian reserve within Canada; its marketing office is in London but most of its 1,000 staff work in a call centre and software development site in Hyderabad, southern India.
  • Future market opportunity: China, with a significant gambling population remains untapped.

1 Comments:

At 9:09 PM, Blogger mikeelikesit said...

The online casino is an improvement in convenience of the brick and mortar casino. Online gambling today offers a complete software solution to all of gaming desires. You may download and install the casino software on your PC, but many online gambling sites also provide the player with the option very quick flash or java games.

 

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