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The closure of Playboy's online poker room last week appears to be just the tip of the iceberg.
The famed company warned investors that it will take a write-down of goodwill and other charges amounting to more than $100 million, resulting in a net loss for Q4. The magazine publisher also expects a $4 million charge on cost-reduction initiatives, which will include an unspecified number of job cuts. The company will also fold its New York office according to reports.
"Who knew sex was a bad business to be in?" asks Belinda Luscombe of Time Magazine.
It's not so much the downsizing that has people worried as it is Playboy's decision to cancel this year's much ballyhooed Super Bowl party.
From Time Magazine's Luscombe:
"This gala was widely regarded as football's equivalent of the Vanity Fair Oscar party. Last year's bash - for which tickets cost somewhere in the neighborhood of $2,000 - was hosted by Grammy winning hip-hop artist Common and featured a drop-in by Hugh Marston Hefner himself, along with his three obliging companions from E!'s The Girls Next Door and a herd of other Playmates."
The Playboy online poker room was barely around two years before it decided to shut down. Part of the problem was lack of market share due to the card room's inability to crack the U.S. market. Playboy Poker reserved its right not to enter the U.S. following legislation banning many forms of Internet gambling in October 2006, right around the same time Playboy relaunched the room. Like Braniff Airlines, Playboy had failed twice. Unlike Braniff Airlines, Playboy is not likely to reincarnate itself a third time.
Jagajeet Chiba, Gambling911.com
