Neteller Optimistic on 'Milestone' Year

Neteller this morning revealed a $185.7 million full-yearly pre-tax loss, but Chief Executive Ron Martin said the company was recovering well from a year that saw millions paid in settlement to the U.S. Justice Department.

Martin called 2007 a "milestone," using the term in reference to the successful completion of its legal dealings with DOJ.

Last July, Neteller agreed to part with $136 million after pleading guilty to handling billions in what the U.S. government termed illegal gambling proceeds. The final payment in the settlement, an installment of $38.25 million, was sent in January.

To date, Neteller and BetonSports are the only major, London-listed I-gaming businesses to settle with DOJ. PartyGaming and 888, also listed on the LSE, voluntarily entered into talks with the DOJ last spring regarding their activities stateside prior to the October 2006 enactment of the UIGEA.

Total group revenue fell to $84 million from $257.3 million in 2006, reflecting its exit from the U.S. market.

Concerning revenue from its Europe- and Asia-facing operations, however, Neteller reported growth of 28 percent and 44 percent to $41.7 million and $11.4 million, respectively.

More broadly, Martin told Reuters that the company was benefiting from down-scaled operations and revenue growth in online gambling and other areas of its Internet-based business.

Martin said that by 2010, the company will look to have reduced its dependence on revenue generated by its online gambling payments arm, which currently accounts for 80 percent of its business.

Martin added that he was "comfortable" with 2008 forecasts and expected "some upward revisions" from analysts.

Indeed, Numis Analyst Richard Carter is already projecting the company will finish 2008 with net cash of $98.7 million, up 22 percent on $80.8 million in 2007.

Meanwhile, the company said current trading showed continued growth from 2007, with an estimated 1,140 new account signups, daily, for the first two months of 2008.

Martin also said the company is hoping to restart dividend payments within a year -- analysts are calculating more than $130 million could be returned to shareholders in 2008.

On the back of a buy recommendation from Numis, shares in Neteller gained 0.75p, or 1.2 percent, to 63.00.