Online poker and casino software developer CryptoLogic announced Thursday that CEO Bryan Hadfield has stepped down following a poor second quarter that resulted in record losses for the company. Hadfield, who took over the position in 2008, will be replaced by Chairman David Gavagan on an interim basis.
Hadfield joined CryptoLogic as a director in 2007 before replacing President and CEO Javaid Aziz, who retired after guiding the company to continued success through tumultuous post-Unlawful Internet Gambling Enforcement Act (UIGEA) times. However, CryptoLogic suffered sustained losses and constant restructuring after Hadfield took over, leading to his resignation this week.
CryptoLogic posted a record loss of $12.7 million in the second quarter of 2010 after a loss of $3.2 million the previous quarter. The decline was mostly affected by a drop in total revenue, which had plummeted from $10.14 million in the second quarter of 2009 to $6.74 million in 2010. Branded games revenue increased from $1.3 million to $1.5 million, but poker and other revenues fell from $1.3 million to $700,000 in the second quarter of this year.
In addition to the revenue losses, CryptoLogic’s operating, general and administrative, and amortization costs had risen to $12.9 million from $11 million in the first quarter of this year.
The company blamed the decline on subdued wagering and reduced contribution from major licensee William Hill Online. William Hill partnered with Playtech to form William Hill Online in 2008, resulting in a drop in revenue for CryptoLogic. William Hill also left the Cryptologic Poker Network for the fast-growing iPoker Network at that time.
CryptoLogic decided to drop its poker network in 2009 after poor results left many more sites fleeing to other networks such as iPoker and Cake Poker. The network included sites such as InterPoker, Paradise Poker, Classic Poker, and Parbet, but Boss Media merged with CryptoLogic in March 2009 and took over the rooms on their its network.
As reported by egrmagazine, a spokesperson for Cryptologic released a statement about the company’s poor financial performance: “In the light of continuing difficult trading conditions, a further restructuring is being implemented to reduce significantly the cost base including a reduction in the total workforce by the end of Q4 2010. Following a review by a leading firm of industry consultants announced previously, a number of measures are being implemented to improve the performance of the hosted casino business.”
As part of the new restructuring, CryptoLogic announced back in May that Huw Spiers will join on as Chief Financial Officer on August 15. Spiers is a Fellow of the Institute of Chartered Accountants in England and Wales, and brings more than 20 years of experience to the company, including nine years as CEO of PolarLake.
Said Spiers, “I am delighted to join CryptoLogic, an exciting company with excellent long term prospects. It has a proven internet-based business model, a blue chip customer base and great products aimed at a global market destined for long term growth.”
Stay tuned to Poker News Daily for the latest CryptoLogic news.
