|Credit card denials and a hacker attack have taken their toll on CryptoLogic’s first quarter financial results for this year, but the company claim that the worst is behind them.|
The Toronto-based company said revenue for Q1 was $8.7 million (US), a 20% year-on-year drop compared to last year’s Q1 figure of $10.1 million. The results came in 8% below analysts expectations, as surveyed by First Call/Thompson Financial.
CryptoLogic downgraded its financial targets for the year, projecting between $44 million and $46 million in revenue (down from $45 million to $50 million) and $13.5 million to $15 million net profit (down from $17 million to $20 million).
'Lower revenue in the quarter reflects the short-term challenge being faced by the entire industry as it adjusts to the impact of the U.S. credit card situation,' Jean Noelting, CryptoLogic's chief executive, said in a release.
The shortfall in revenue was anticipated by Cryptologic and factored into the company’s full year estimates for 2002 after hackers attacked the servers of some CryptoLogic licensees last September, rigging the software so that on some games, players would win continuously.
Since then, some credit card companies in the US have denied transaction requests related to online gambling, forcing companies to find other methods of payment, such as cheques, and services such as PayPal. Now, credit card companies are even making it hard to transfer funds to and from PayPal.
In a separate announcement, CryptoLogic said it had settled a civil suit filed by the New Jersey gaming authorities.
The settlement acknowledges that CryptoLogic, WagerLogic and the WagerLogic licensees named in the civil action have not violated any law, statute, ordinance, contract, duty or obligation, CryptoLogic said.
The company has hired John Chalmers, a former Ontario provincial police officer with extensive experience in the gaming business, as vice-president for legal affairs.