Ladbrokes fail the digital hurdle

I mentioned the other day the turnaround in the fortunes of William Hill, a UK bookmaker that had been struggling for some time, at least in the eyes of the City, but now seems to be on the road to recovery.  Not so the other big UK bookmaker Ladbrokes.

Ladbrokes had one of those investor meetings today which included some news that the markets took badly.

The investment in technology, digital capability and marketing has continued as scheduled in H1 with costs overall in line with plan. As stated previously, we anticipated that the phasing of our investment programme, increased marketing expenditure, planned operational losses associated with new international licences and the withdrawal from certain international markets would result in a decline in Digital profits year over year.

This decline has however been exacerbated primarily by a poor sportsbook margin in Q2 and by delays in the delivery of technology projects leading to lower than expected revenue in Q2. As a result we now expect Digital profits in H1 to be down further than anticipated at around half that delivered in H1 2011.

The market reaction has been instant and destructive, Ladbrokes shares down around 9% at writing, but is this the usual case of a knee-jerk city reaction that when the final figures come in is a setback but not a disaster?  


Should be noted that this is a "profits warning" on the digital/online takings of the company, an area where they have seriously lagged behind competitors anyway, but they did go on to say.

Despite this due to outperformance, particularly in the Retail businesses we expect to meet market expectations for H1 and remain confident that ongoing development of the Digital business will enable us to grow Digital profits in 2013 and beyond.

So, they expect to meet market expectations and unless more profit warnings are to follow, today's fall may well be overdone in the greater scheme of things, but for today Ladbrokes seems to be getting the Tesco treatment from the city.

Meanwhile, Ladbrokes rival William Hill seems to go from strength to strength despite falling in sympathy today.

William Hill completes US acquisitions

28 June 2012

William Hill PLC (LSE: WMH) (William Hill or the Group), the UK's largest bookmaker, confirms that the acquisitions of American Wagering, Inc. (AWI) (OTC:BB: BETM), Brandywine Bookmaking LLC (Brandywine) and the racing and sportsbook assets of Sierra Developments, trading as Cal Neva, have been completed

 Company announcements from DigitalLook.