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The Maven: Chaos Brings Opportunity

Reports of online gambling's death may be exaggerated. Plus, pie in the Skype.

Online gamblers who operate in America have been given up for dead, thanks to passage of legislation to ban the practice. So the first bumptious declaration that these companies might somehow, someway be looking to find a way to fight another day did not get much play in the press this week. I had to go all the way to England -- to

The Daily Telegraph

in the U.K., where all the online-gambling officials not under house arrest in the U.S. are hiding beneath their mattresses --- to find mention of this possible declaration of counterattack in this intriguing little headline:

"PartyGaming has not given up on U.S."

What followed was a modest little article -- which we'll get to -- but the public's assumption that online gambling is permanently dead in America and the business media's underplaying of these fightin' words that maybe it's not -- seems indicative of opportunity to the Business Press Maven.

First, let's back up.

Personally, The Business Press Maven found online poker a healthier alternative to the traditional kind because he was a touch less likely to drink and smoke cigars when alone. Professionally, though, I see this as the ultimate test case of whether an industry assumed to be kaput because of government overreach can, in fact, survive -- even thrive. History is on the side of a comeback, from alcohol in the time of Prohibition to healthcare in the waxing years of Clinton.

Anyhow, as I've said before, I think it's only a matter of time before a smart and dastardly approach (Offshore money orders? An American government controlled by a party that won't harness a gambling ban onto a pork bill?) put the online gamblers back in business.

Online gambling officials, busy trying to stay out of American penitentiaries, have been scared to say as much publicly -- but Mitch Garber, the chief executive of PartyGaming, pulled up close: "Chaos brings opportunity, and this is an unbelievable opportunity."

He added: "We still have 10 million customers in the U.S. with our software on their desktops or laptops. We should be looking at a way to maximize the value of those customers. We're not going to offer them online gambling, but we should be looking to offer them legal service."

Garber might be acting coy here -- the software is still there, and we'll be back to deal. Or he might be looking to leverage the ruined portion of his business into something salvageable. Either way, should PartyGaming and 888 Holdings, which have lost so much of their value, really be given up for dead by the business media and shareholders alike? That gets The Business Press Maven's dreaded "Back of the Hand" award for the week.

Whether

Coke

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will ultimately name Muhtar Kent as their chief executive became a topic of conversation as he went up for the company's number two job this week, president of international operations. For those who missed it, Kent was fired from his post as a Coke bottler in Australia a decade ago after selling short 100,000 shares of the company's stock right before a profit warning. The coverage centered upon his denial of wrongdoing, and Neville Isdell, Coke's chairman, was quoted as all but saying "no biggie."

Here's my question, though, and it goes beyond the business media's straight look at whether Kent committed an illegality of trading on inside information. Would you ever hire a guy who shorted shares of a company he was heading up? If he doesn't have confidence in his own management ability, who can?

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The Business Press Maven will never sell himself short -- nor would I ever sell

eBay

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short -- but I've been tempted on occasion, at least when it comes to eBay. This week came a typically vexing earnings report from the online-auction giant which is trying to expand beyond hosting bidding wars for commemorative game-use Business Press Maven keyboards.

Take Skype, the Internet phone service that eBay probably overpaid for, but the division that probably sits at the center of the success of any diversification efforts. I want to direct you to different mentions of Skype's results from the business media this week, the first regurgitating what management says, the other thinking for itself -- which might lead to eBay shareholders regurgitating their lunch.

Said

Forbes

: "eBay's Skype Internet phone service, which Whitman

as in Meg, the company's less-than-universally loved CEO said will be a big earner for the company in the future, reported revenue of $50 million for the quarter, up from $44 million."

Compare that little piece of parroting to Rick Aristotle Munarriz from the

Motley Fool

who is the proud recipient of this week's coveted Business Press Maven "Nod of Approval" award:

"Skype is the third verb in the eBay portfolio. It's the speedster here, yet I am troubled to find that the number of subscribers grew by 20% sequentially while revenue only rose by 13% over its June quarter showing. The company argues that the disparity took place because a lot of the new user growth was in the thriftier Asian region, but that's also not much of a selling point if its greatest growth is taking place where users will be spending less."

The reporter with Aristotle for a middle name (what a byline) then goes on to say that he can't yet side with the cynics, but for Skype to succeed to any real degree long-term, eBay is going to have to do better with it.

I'll see you on that, Aristotle, and even raise you one.

A journalist with a background on Wall Street, Marek Fuchs has written the County Lines column for The New York Times for the past five years. He also contributes regular breaking news and feature stories to many of the paper's other sections, including Metro, National and Sports. Fuchs was the editor-in-chief of Fertilemind.net, a financial Web site twice named "Best of the Web" by Forbes Magazine. He was also a stockbroker with Shearson Lehman Brothers in Manhattan and a money manager. He is currently writing a chapter for a book coming out in early 2007 on a really embarrassing subject. He lives in a loud house with three children.