Earnings by Ray Poirier |
Acquisitions may not have been the downfall of Youbet.com (UBET) but they certainly have helped put the company in desperate shape. In fact, the company needs to get its share trading price above the $1 level if it hopes to continue trading on Nasdaq.
But, that is what interim chief executive officer Gary Sproule, who took over when former CEO Charles Champion departed last November, focused on last week.
The company reported that the offshore wagering entity International Racing Group, which it closed recently, had cost the company $9.9 million in write-offs in the fourth quarter. It also cost $2.5 million due to a federal investigation that led to the demise of IRG.
The IRG acquisition was a bust and so, apparently, was the purchase of United Tote, a division that provides horse race betting software and hardware. United Tote has been struggling, according to Sproule, who added that the division may be put it up for sale.
It is the intention of the new management team, said Sproule, to get the company focused on its core business, the ADW Internet platform Youbet Express.
"We will keep a keen eye on our balance sheet," he said, as management hoped to make 2008 "a key turnaround year" for Youbet.
Youbet took another hit when the partnership of Churchill Downs Inc. (CHDN) and Magna Entertainment Corp. (MECA) formed TrackNet Media Group, as competition for its advanced deposit wagering business and restricted the content from its North American racetracks to its own ADW firm.
For the fourth quarter of 2007, the company reported a net loss of $28.6 million, or $0.68 per share compared to a net loss of $5.1 million or $0.14 per share in 2006.
Taking in the entire year, the company had a loss of $27.3 million or $0.65 per share compared to a 2006 loss of $2 million or $0.06 per share.
President and CEO Ted Arneault had great hopes for his MTR Gaming Group Inc. (MNTG) when the company made the deal to acquire Binions’ downtown hotel/casino from Harrah’s Entertainment Inc. Unfortunately, things didn’t pan out and Binions was sold earlier this year.
Arneault also had great hopes when he acquired Scioto Downs harness track in Ohio whose prospects at the time appeared good for the addition of slot machines. That also didn’t pan out and the track has had a negative influence on the company’s earnings.
The same could be said for Jackson Raceway in Michigan, another loser.
So after 13 years, Arneault has given his notice. He will leave the company at the end of this calendar year. He didn’t say he was feeling the pressure from the large number of shares in MNTG being acquired by the family that owns Jacobs Entertainment.
On Monday, he reported the company had loss $8.6 million or $0.31 per share in the fourth quarter of 2007. This compared with income of $518,000 or $0.02 per share a year earlier.
Net loss for the fiscal year 2007 was $11.3 million or $0.41 per share.
And on top of all his other problems, Arneault has had to deal with a strike at the company’s flagship, Mountaineer Casino Racetrack & Resort in Chester, West Virginia. As of Monday, there was no indication that the strike would end soon.