Friday, March 5, 2004

Games Inc. predicts profit


Online game licenses alone expected to bring in $1 million

By Cliff Peale
The Cincinnati Enquirer

The acquisition of Internet site www.games.com and online licenses for games including Monopoly and Risk should provide more than $1 million in revenue this year and make Games Inc. profitable, the company told shareholders Thursday.

Officials of the online gaming company, run by downtown businessman Roger Ach, said they plan to close the purchase from Atari Inc. at the end of March. That includes a $3 million cash payment for upfront royalty fees.

Games has seen interest in a new offering of preferred stock to raise that money, chief financial officer Myles Cairns said.

Web sites such as Yahoo and MSN attract millions of players per month, and the Atari deal should vault Cincinnati-based Games Inc. into the top five online gaming sites nationally, Cairns said at the company's annual shareholders meeting.

The Atari deal is part of Games Inc.'s transition from a company focused on selling online lottery tickets to one focused on providing games for online users.

Once the site is relaunched this spring, players at games.com will be able to buy an annual subscription for $29.95, a monthly subscription for about $7.50 or a "Roll of Quarters" that users can spend as they play. "We need a very small percentage of the registered users to participate on a revenue basis to make this company hugely profitable," Cairns said.

That has not been the case so far for Games. During the year ended June 30, the company lost $2.5 million. But Cairns said advertising revenue is increasing, and the Atari deal should increase revenue even more.

Shareholder Ron Sharp, who bought Games Inc. stock at less than $1 per share last year, said the growth potential drew his investment. The thinly traded stock closed Thursday at $1.15 a share.

"For lack of a better term, it's interesting," Sharp said. "It's the first time I've ever purchased a penny stock."

The "wild card," Ach said, is whether any state decides to allow online sales of state lottery tickets. Games also controls the Internet site www.lottery.com and has tried for years to convince at least one state to sell the tickets online.

The Georgia Legislature is considering allowing online lottery sales, but no state has allowed it so far.

E-mail cpeale@enquirer.com




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