Impairment Hits Youbet Bottom-Line

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Youbet.com reported a loss of $4.5 million for 2008, fueled by an $11.2 million fourth-quarter impairment charge for subsidiary United Tote, the company reported March 5.

The company’s income from continuing operations excluding the non-cash impairment of United Tote, which the company has said it might sell, was $5.4 million. Excluding the impairment, Youbet’s fourth quarter profit was $1.2 million.

“We are very pleased with our fourth quarter, as well as our results for 2008 as we achieved a profitable year, excluding the $11.2 million impairment charge for United Tote,” Youbet chief executive officer Michael Brodsky said in a press release.

The $4.5 million annual loss is a significant improvement over 2007, when the company posted a loss of $28.4 million, a figure that included $17.9 million in impairments to United Tote and the closing of its former offshore rebate shop, International Racing Group. Total revenue for the full year 2008 declined 11% to $109.0 million from $122.5 million in the prior-year period.

The company’s namesake online betting platform, Youbet Express totaled $438.3 million in handle, a 9% drop from the $482.4 million reported for 2007.

Fourth-quarter handle for Youbet Express was $107.3 million, a 0.8% increase over the $106.4 million recorded in 2007. The reported per-customer handle increased 6.7% in the fourth quarter. Same-track and same-state handle in the quarter decreased $2.3 million, or 21%, from 2007, while handle attributable to new content was $4.1 million, the company reported.

“We are especially pleased with our ability to increase handle over the prior-year quarter given the current economic environment and challenging state of the industry,” Youbet chief operating officer David Goldberg said in a statement. “We believe it is a testament to our platform and user experience that we outperformed the industry in this metric and were able to do so on a profitable basis, excluding the impairment charge.”

In early morning trading on the Nasdaq exchange March 5, shares of Youbet were down 2.4% to $1.23, about double the 52-week low of 65 cents.
 

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