Youbet.com Shares Fall After 2Q Report

SAN FRANCISCO (AP) — Shares of Youbet.com Inc. fell Thursday after the online horse racing and betting company reported its second-quarter earnings sank 28 percent — missing analyst expectations and providing another indication the gambling industry is still hurting from lower consumer spending during the recession.

Youbet shares fell 18 cents, or 6.7 percent, to $2.57 in afternoon trading.

The Burbank, Calif.-based company said earnings fell to 3 cents per share from 5 cents per share in the year-ago quarter. Revenue rose 3 percent to $30.2 million.

Analysts surveyed by Thomson Reuters were expecting a profit of 6 cents per share on $30.8 million in revenue.

The company said commissions climbed 10 percent to $23.9 million, but contract revenue dropped 13 percent to $5.5 million. Equipment and other revenue declined, too.

In a client note, Craig-Hallum Capital analyst Mark Argento kept his "Buy" rating and $4 price target for the stock. The analyst said that possibility that legislation could go forward that allows the company to operate its online betting service in more states, along with prospects for international expansion are the company's two largest potential growth drivers.