AUTHOR: Jerry "Jet" Whittaker TITLE: Wall Street's poker gamble: All-in with WPT DATE: 7:04 AM ----- BODY: Poker may not seem as hip as it was just a few years ago. And nobody's
feeling that more than shareholders of WPT Enterprises, operator of the
World Poker Tour. Wall Street has pretty much cashed in all its chips on WPT
over the past few years. The stock, which hit an all-time high of $29.50 in
2005 on merger speculation, has since sunk to about $5. Some have argued
that poker is a fad, but WPT Enterprises is hoping that a new online poker
site will lead to higher revenue and profits for the company. Hold 'em or
fold 'em? Shares of WPT Enterprises have plunged during the past two years,
but some analysts think a rebound is in the cards. A group of investors led
by poker legend Doyle Brunson made an offer to buy the company in 2005, but
the takeover overture turned out to be a, uh, bluff. WPT (Charts) then hired
investment bank Thomas Weisel last February to explore the possibility of a
sale, only to have the company announce in September that it had decided to
remain independent. But some analysts think that the company is now a good
bet. WPT reported fourth-quarter numbers after the close Monday, and the
results were mixed: sales jumped 13 percent, but the company reported a loss
of 5 cents a share, larger than analysts were expecting. Wall Street also
expects WPT to post a loss of 4 cents a share for all of 2007. Still, the
company, which generates the majority of its sales from domestic television
licensing revenue - World Poker Tour and Professional Poker Tour shows air
on the Discovery Holding (Charts)-owned Travel Channel - hopes to become a
winning hand with investors once again thanks to the relaunch of its online
poker site later this year. Clint Morrison, an analyst with Feltl & Co., a
Minneapolis-based investment bank, said the company's first online poker
site - which is only available to consumers outside of the U.S. since
Internet gambling is illegal here - has not been as big a success for WPT as
the company originally hoped. That's because the site, which was run by a
third party, had several technical problems and often crashed. Morrison said
the company has learned from its past mistakes and invested heavily in
software to develop a new site that it should roll out sometime in the
second quarter of this year. And even without the prospect of getting money
from U.S. poker junkies, Morrison still thinks that WPT could do well with a
new site since online poker is about a $1 billion market globally. "The
whole story is going to be WPT bringing up their new online poker site.
That's where the real growth and the upside for the stock is. They should be
able to leverage a strong brand in what is a large and profitable market,"
Morrison said. --------