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Cryptologic to Restructure Operations

By: Fabian Rictor, Friday November 12th 2010
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The leading online gaming software developer Cryptologic has announced its financial results for the third quarter ended September 30, 2010. The results are not good, but what may enthuse players at Cryptologic online casinos is that the restructuring program announced in August 2010 is on course and is being expanded further.

Upfront Cryptologic announced that the restructuring measures put in place earlier have resulted in a 20% decrease in operating costs in Q3 as compared to Q2 and this would further fall in Q4 when the full effect of the measures would be felt. Cryptologic has now closed all its operations in Cyprus, having shifted them to Malta. Most of the London operations have also been shifted. A new operational management team has been appointed to lead hosted casino business and reinvigorate the revenue base. There have been senior management changes as well. Huw Spiers has become Group Head of Operations and Chief Financial Officer and Ian Price has become Group Head of Business Development. The planned reduction in the employee size had been completed. Cryptologic has not divulged the exact numbers but have indicated that they still have over 100 employees. However other items on the restructuring are under implementation. Chairman David Gavagan, who had stepped in to act as interim chief executive to oversee the restructuring, did not divulge the details calling them "work in progress". He said that he would "be able to talk more freely" once the process was complete.

Cryptologic also released segment wise status on its outlook. The revenue from fully hosted virtual casino rooms provided to online gaming brand operators showed a marginal fall from Q2, which reflected normal seasonal patterns. Betsafe, a leading online gaming operator, was taken on board during the quarter. Revenues from the branded games segment also declined marginally due to a decline in revenue contribution from a key licensee. 13 new branded games went live in the quarter taking the total number of games rolled out by licensees and generating revenues to date to 156.

The numbers released were as follows. The total revenue for the third quarter of 2010 amounted to $6.1 million. The net loss for the third quarter was $3.7 million. The net cash at September 30, 2010 was $12.3 million. The Company continues to be debt free. Two items of note took place in the third quarter. The first was Cryptologic's settlement with Marvel over the branded super hero slots. The settlement resulted in a non-exclusive usage right for Cryptologic but at reduced costs. The other event was a licensing deal with Tain AB. Both these will contribute to Cryptologic's future profits in a recurring manner.

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