Lewis Rose jumped from interactive television to interactive gaming when he was named interim CEO this week of CryptoLogic Inc. It isn’t clear, however, if the online gambling software company has dealt him a good hand.
took control of the Toronto-based firm from Jean Noelting, who held the job for 18 stormy months. In the last six alone the company’s stock dropped from around $35 to the $11 range as revenues dropped because American banks started refusing to process credit card charges from online casino players.
In addition to casino license fees, CryptoLogic gets a slice of every dollar bet.
It also took a $6.6 million (US) charge after buying SCG Enterprises, the online gaming division of British portal Sports.com, only to see the portal go into administration.
That led CryptoLogic in June to revise its second quarter revenue projections down. At that time Noelting promised to return to sequential earnings growth in the third quarter. The board, however, wanted a dealer change.
While painting it as a mutual decision between the board and Noelting, chairman Dennis Wing acknowledged there were differences.
“”Certainly there was some disagreement, otherwise we wouldn’t have made the change,”” he said in a telephone interview. “”We thought change was the right thing to do and he didn’t disagree with us,”” said Wing.
Some board members might have felt Noelting didn’t move fast enough to find alternate player payment methods, Wing said. Another problem was delays in delivering new software. As for the Sports.com strategy, “”obviously it wasn’t executed very well,”” he said.
That’s putting it mildly, according to Sebastian Sinclair, an industry analyst and vice-president of Christiansen Capital Advisors in New York. “”The deal never made a whole lot of sense to me,”” he said.
On the other hand, he doesn’t blame management for the credit card woes.
In a way it’s a second chance for Rose, who was on the short list for the CryptoLogic post before losing out to Noelting. For the past two years he’s been CEO of E-tv Interactive Technologies. Before that he was president of Alliance Atlantis Communications and of Maple Leaf Foods Inc.
In an interview Rose emphasized his background as a chartered accountant with experience in corporate finance will help with possible mergers or acquisitions as the Internet gaming industry consolidates.
Meanwhile, like his competitors, Rose is looking for payment options and casinos to sign up in European and Asian which are beginning to regulate — and legitimize — online gambling.
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