Online problems depress profit for bid target William Hill

* First (Other OTC: FSTC - news) -half operating profit falls 16 pct

* Poor online performance blamed

* Says still waiting to hear details of 888-Rank approach (Adds CEO comments, shares)

By Paul Sandle

LONDON, Aug 5 (Reuters) - William Hill (Frankfurt: 633847 - news) , the British bookmaker that last month sacked its chief executive and has received a takeover approach, said it needed to do more work to fix its online business after operating profit fell 16 percent in the first half of the year.

The bookmaker, set to lose its market leadership in the latest round of industry consolidation, received an approach from smaller online rival 888 Group and casino and bingo hall operator Rank two weeks ago.

William Hill has been struggling to keep up with rivals in online gambling and the board last month lost patience with chief executive James Henderson after only two years in the top job.

Philip Bowcock, who has stepped up from finance chief to interim CEO, said he had no update on a possible three-way deal with 888-Rank, but added that the board would obviously consider any proposal received.

"We don't necessarily see the strategic logic or fit, and we wait to hear from them," he said.

Bowcock called the first half challenging but added the company was committed to fixing its problems.

"Clearly online is where we have to concentrate most," Bowcock said after online operating profit fell by a third in the period.

Online gambling via smartphones and tablets has helped to drive growth for betting companies but it is a crowded field with traditional bookmakers jostling for market share with younger companies.

"We are in the pack, and what we need to do now, is make sure we get ahead of the pack," Bowcock said, adding that buying software maker Grand Parade earlier this week showed how serious it was in tackling the problem.

First-half operating profit fell to 131 million pounds ($172 million) on revenue which was 1 percent higher at 814 million pounds for the six months to end-June.

The company said it still expected to meet its guidance to deliver operating profit of 260-280 million pounds for year.

Shares (Berlin: DI6.BE - news) in the group were trading 0.8 percent lower at 310.5 pence at 1010 GMT.

Stockbroker Goodbody said William Hill was losing market share in both online and its retail business.

Rival Ladbrokes, which will overtake William Hill in number of betting shops when it merges with Coral later this year, showed it was outpacing William Hill in growth online and in over-the-counter bets when it reported on Thursday. ($1 = 0.7608 pounds) (Editing by Keith Weir)