http://www.canada.com/news/story.asp?id={9BAF2BB1-87C1-4725-AF77-9881D5B89E1D} [This has to be one of the first times I have seen a corporation listing a hacker attack as a loss on their financial statement. $1.3 million is no chump change today, all the managers on this list looking for additional $$$ in their infosec budget should be pointing this article out when the powers that be think that something like this will never happen to their company, and that the V.P's really should have new Herman Miller chairs instead. - WK] Paul Vieira National Post Tuesday, February 05, 2002 CryptoLogic Inc., a gambling software maker, saw its fourth-quarter profit drop 10%, largely because it took a charge related to a hacker attack last August that saw 140 online gamblers pocket winnings of about US$1.9-million. The company, in a conference call with analysts yesterday, said it hopes to recover a good chunk of the illicit gains through an insurance claim. Nevertheless, it is taking a US$1.3-million charge. "A prudent approach was necessary," said Jean Nolting, CryptoLogic's chief executive. In the span of a couple of hours, a computer hacker broke into CryptoLogic's Web servers and reprogrammed slot machines and a craps table at two Web-based casinos that use the company's software. Slot machine and craps players at the casinos won each time they played. The charge pulled down profit for the three-month period ended Dec. 31 to US$3.7-million, or US28¢ a share, from US$4.1-million (US29¢). Meanwhile, revenue for the quarter increased 15%, to US$11.2-million from $9.7-million. Despite the fourth-quarter charge, the company posted higher profit in 2001. For the full fiscal year, CryptoLogic earned US$18.1-million (US$1.33) on revenue of US$43.5-million, compared with $15.5-million (US$1.18) on sales of US$34.4-million. Excluding the writeoff, profit would have been US$4.2-million for the fourth quarter and US$18.6-million for the year, the company said. Also, the Toronto firm said it posted profit margin of 45% and has US$60-million in cash as of the end of 2001. During its call with analysts, Mr. Nolting said 2002 had the makings of a "profitable year, with solidly upside potential," especially in the second half. For this fiscal year, the company forecasts revenue of US$45-million to US$50-million and profit between US$17-million and US$20-million. It expects to hit the "bottom" of the growth curve in the first quarter. However, CryptoLogic said U.S. banks' refusal to accept credit card charges from online gambling sites could hinder growth prospects in North America. Credit card rejections in the United States jumped 25% in December as anti-terrorism efforts and the uncertain legality of online gambling in North America cast a chill over U.S. banks. Therefore, the company said, it will be examining offshore markets. "Europe and Asia -- those will be our key areas," Mr. Nolting said. By the end of the year, it wants half of its revenue to come from Europe and Asia, the rest from North America. About 65% of its sales now come from North America. A key part of its foreign focus will be an online casino to be operated by Littlewoods, a British-based gambling operator. However, the launch of Littlewoods.com has been delayed as regulators in the Isle of Man, where the online casino will be incorporated, want more information about the software. But Mr. Nolting said he expected Littlewoods to be in operation by the end of the first quarter, and to generate up to 10% of total revenue. Growth in 2002 will also be aided by the release of online versions of bingo and poker that the company has been developing. - ISN is currently hosted by Attrition.org To unsubscribe email majordomoat_private with 'unsubscribe isn' in the BODY of the mail.
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