Cryptologic Strategic Review

April 1st, 2011  |  Published in Casino News

Industry-leading online gaming software provider, Cryptologic, recently engaged Deloitte to strategically review their company. Deloitte is one of the “Big Four” international financial advisory and consulting firms. No time frame has been indicated by either party.

The Message to the Industry

The statement on Cryptologic’s website reads, “This review is at an early stage and will consider a number of strategic options, including the possibility of an offer being made for the Company or a disposal part of the business. The board wishes to stress that there can be no certainty that any offer will be forthcoming.”

Restructuring Efforts

This news is not surprising to industry analysts as Cryptologic has had some fiduciary trouble for some time. In the summer of 2010, the Board of Directors took drastic measures with response to the eight-figure net losses by the organization. At this point, the CEO resigned and the company underwent a major organizational restructuring process with cost-cutting as the goal.

By shifting Cryptologic’s operations from Cyprus and the U.K. to Malta and cutting 50% of the workforce, the objective was achieved. Many industry analysts believed this was an excellent decision on the road to recovery and the numbers proved to be consistent with this idea.

The Numbers Before and After the Restructure

The restructuring and cost-cutting efforts reduced losses of $20.4 million for 2010 compare to $35.5 million the year before. The quarterly breakdown is even more impressive with the last full quarter prior to the restructuring (Q2) showing a loss of $12.7 million. The first full quarter following the restructuring (Q4) showed a loss of only $0.8 million indicating that Cryptologic was headed back toward recovery.

Announcement of a Strategic Review

A short time after the release of this information, a strategic review was called. This indicated that despite the restructuring efforts, the future of Cryptologic was in jeopardy. Following the announcement of this review, the shareholders were told they would be updated as soon as the board deems an appropriate time to do so. Therefore, even the investors are on the edge of their seats awaiting a response.

Emerging in the mid-1990’s, Cryptologic is one of the pioneering software development companies for online gambling. With the contributions Cryptologic has given toward advancing the online gambling industry to what it is today, if the company is slated to be sold, this will be a sad day for online casino operators.

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