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Betfair begins search for new chief as David Yu steps down 27/06/2011
Rupert Neate
• Gambling firm's full-year profits forecast to rise 15% to £31m
• Analysts say market views departure of David Yu as 'positive'


Betfair saw its shares slump to a fresh low after the troubled gambling group's chief executive confirmed that he was leaving the company.

The shares, which were floated at £13 last October, dropped to 715p during trading on Monday after David Yu, Betfair's chief executive, said he was leaving the company after 10 years at the helm.

Yu's departure comes amid increasing frustration among investors over the company's poor performance in the eight months since its flotation. The FTSE-250 company ended the day with a market value of £777m, compared with £1.4bn when the company floated.

The 43-year-old Observers had warned that the £13 a share flotation had been "priced to perfection". Yu personally sold £5.2m of Betfair shares in the float.

Yu, who has worked at Betfair since 2001 and been chief executive for almost six years, said he did not intend to renew his contract, which is due to expire in October next year.

He said he would stay with Betfair while it conducts the search for his successor. Yu, who was absent from work in March due to a heart complaint, is expected to return to America.

"I will remain committed to delivering the best for our people and our shareholders and will give the board all possible support during the succession process so we can find a great, new CEO to steer Betfair through its next phase of growth," he said in a statement.

Edward Wray, Betfair's chairman, said he understood why Yu wished to stand down and added that "the open manner in which we will conduct the search will make it easier for us to find the best candidate for the role".

The Guardian reported at the weekend that Betfair had already begun approaching headhunters.

Paul Leyland, an analyst at Investec, said Yu's departure was a "potential opportunity for improvement".

"However, we believe the issues are now as much structural as leadership-related and it could prove difficult (if not impossible) to 'turn the tanker' – we therefore reiterate [our] sell [rating on the shares]," Leyland said.

James Hollins, an analyst at Evolution Securities, said: "Given the share price performance since float and increasing market concerns over strategy and leadership, this is not unexpected and is likely to be taken as a positive."

On Wednesday Betfair is expected to report a 15% rise in full-year profits to £31m on sales up 9% to £373m, according to analysts at Morgan Stanley. The shares ended the day down 16.5p at 726.5p.

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