UPDATE 1-NETeller eyes dividend payments, profit upgrades

(Adds detail, company, analyst comment, background)

By Marc Jones

LONDON, March 11 (Reuters) - Online payment company NETeller NLR.L, famed for being U.S. authorities' first corporate scalp in a crackdown on Internet gambling, said it was on the road to recovery and hopes to restart dividend payments within a year.

Last July, the company had to pay the U.S. government $136 million after pleading guilty to charges of handling billions of dollars of illegal gambling proceeds.

NETeller revealed the full impact of those woes on Tuesday, reporting a $185.7 million pretax loss.

Chief Executive Ron Martin told Reuters the company was recovering now that its operations had been scaled down and revenues from online gambling and other areas of the Internet were growing again.

"I am certainly comfortable with forecasts (for 2008) and would expect some upward revisions from analysts."

"We see margins moving significantly north over the next couple of years ... the low 60's in 2008 and the mid 60's in 09," he added in a telephone interview.

DIVIDEND

Martin said current trading was strong with around 1,140 people a day on average signing up for an account in the first two months of 2008.

He said the company was also hoping to restart dividend payments within a year with analysts calculating more than $130 million could be returned over 2008.

"We estimate the group will end 2008 with net cash of $98.7 million and believe the majority of the $33 million that will be received from the sale of its Calgary building, can be returned to shareholders, via either share buybacks or a special dividend or a combination of the two as we go through 2008," said Numis analyst Richard Carter.

NETeller makes more than 80 percent of its money from online gambling related payments, but Martin wants that to drop to around 70 percent by 2010 to reduce its dependence on the volatile gaming market.

He said its NETBANX division was close to landing a couple more deals with big Web firms, while shifting its main data centre operations from Canada to the Isle of Man had reduced the costs by 8 to 10 percent on a cost of goods sold basis.

NETeller's shares, which crashed 90 percent when the United States effectively banned online gaming and started arresting executives in 2006, rose 1.2 percent to 63.5 pence by 1350 GMT. (Editing by Elizabeth Fullerton and Mike Elliott)