The publicly traded stock of the World Poker Tour dropped over 20% on Wednesday after the company reported their Q2 2008 earnings. Investors were clearly disappointed with the report, sending the stock to its lowest level ever and raising the question: can the company survive? With this latest drubbing, the World Poker Tour currently has a valuation of just $14.34 million dollars and is firmly entrenched in penny stock territory. The stock is now trading at just 70 cents per share.
Investors were clearly alarmed by the drop in domestic television licensing revenues, the lifeblood of the World Poker Tour business. For Q2 2008, domestic television licensing revenues were $2.4 million dollars, a sharp decrease from $4.3 million dollars in Q2 2007. Overall revenues for the quarter came in at $5.1 million dollars - in the same quarter in 2007, overall revenues were $7.7 million dollars. Clearly this is not a company that is going in the right direction. International television licensing revenues and product licensing revenues also decreased compared to Q2 2007.
The company's online gaming business is not headed in the right direction either. The company reported that online gaming revenues declined in the first six months of 2008 compared to the first six months of 2007, and they are seeing lower levels of player activity compared to 2007.
The company also said that it expects to report revenues of between $2.2 - $2.6 million in the third quarter of 2008.
Even more interesting is the fact that the company, according to their own press release, will "not obtain license fees relating to Season VII of the WPT television series", and will instead "seek sponsorship revenues". The World Poker Tour also said that they had begun "implementing headcount reductions" and "other cost cutting measures". The company had this to say about their deal with FSN in their conference call:
"What it does not provide is significant license fee revenues that we have become accustomed to in the US market. Rather than license fees, WPT has the right to incorporate sponsors to its own benefit as well as four 30-second advertising spots per episode for the first two airings."
FSN and the WPT also announced that they would be collaborating on "a television series based on WPTE’s subscription and sweepstakes game offering, CLUBWPT.com." Clearly the World Poker Tour is hoping that ClubWPT will lead the company out of the quicksand that it has found itself in.
The company also said in its conference call that it would be spending less time and money on its online gaming business. It appears as though they are throwing in the towel of this segment of their company. The WPT said that they would be "refocusing their resources" on "sponsorship, ClubWPT.com and WPT China."
These are clearly desperate times for the World Poker Tour. How much longer until the company completely implodes and throws up the white flag?
Filed Under: Other Poker News