Shares plummeted in internet gaming company Empire Online yesterday after it warned profits would fall some ten per cent below consensus expectations thanks to a recent change in its dealings with sector leader PartyGaming.
In a statement, Empire Online flagged a sharp slowdown in poker revenues since PartyGaming last week shifted all of PartyPoker. com's own players across to Noble Poker's Playtech system.
Previously, Empire and PartyGaming had been strongly intertwined, with Empire Online's Empire-Poker Web site driving customers to Partygaming's software platform.
PartyGaming also said it was separating its own poker players from those directed to its site via "skin sites" such as EmpirePoker.
"The churn rates are up, (Empire's) customers obviously don't like the new arrangement with reduced liquidity and are moving away, " said Robin Chhabra, at Evolution Securities. "It's not good for Empire but PartyGaming will see a net benefit."
Empire's shares have lost nearly two-thirds of their value over the past six weeks as competition from rivals intensifies and Empire separates from PartyGaming.
Empire Chief Executive Noam Lanir remained confident. "The trend rate of growth at Empire Online remains strong and we will continue to grow ahead of the industry," he said in a statement.