Landry’s eyes alternatives
for two major chains

Jul 25, 2006 5:09 AM

To insure that some of the operations of Landry’s Restaurants Inc. (LNY) don’t get in the way of the path that Tilman Fertitta, chairman and CEO, plans to follow, the company announced over the weekend that it is evaluating two of its chains, Joe’s Crab Shack and Saltgrass Steak House.

Fertitta has already indicated that he hopes to focus instead on the higher end Golden Nugget brand that he acquired with the purchase of the Golden Nugget Hotel/Casino in downtown Las Vegas.

Investors seem to agree with the move. In early trading on Monday, traders pushed the price of LNY shares to $29, an increase of more than $2 a share from Friday close.

Landry’s Restaurants announced it plans to hire Wachovia Securities and Northpoint Advisors to help evaluate strategic alternatives for the two brands. The company indicated that higher gasoline prices, energy costs and interest rates had been hurting the performance of the two restaurant chains.

In his GamingToday column last week, Phil Hevener wrote that Tilman Fertitta "has been eyeing a possible Atlantic City casino acquisition, probably one of the Colony properties — Resorts or the Atlantic City Hilton.

"And the AC Hilton was once a Nugget. It was built and opened as the Golden Nugget by Steve Wynn in 1980. It became a Bally property when Wynn sold it in 1986 and returned to Las Vegas to build The Mirage."

Even prior to the strategic evaluation announcement, Landry’s Restaurants said it had closed some underperforming Joe’s Crab Shack restaurants and it expected to record a charge of nearly $6 million or $0.27 per share related to the closures.

The company thus lowered its second quarter profit estimate to $0.70 or 0.71 per share rather than the previous estimate of $0.76 per share.

Barron’s hit piece

Wall Street reacted quickly Monday to a weekend article in Barron’s magazine that suggested the share value of Station Casinos Inc. (STN) would be negatively impacted by an overheated Las Vegas housing market.

The article noted that the fortunes of Station Casinos that operates 12 casinos in or around Las Vegas and plans six more, are closely tied to the city’s home prices that are overvalued.

The Barron’s writer suggested the price of a Station Casinos share may be set for a hard fall, possibly losing as much as half of current value, because of the declining housing market.

In trading on Monday, STN fell throughout the day, reaching at one point $59.60, down $0.89.

Fiscal reports

Additional gaming companies have set the dates and times for their quarterly fiscal reports. They include:

Dover Downs Gaming & Entertainment Inc. (DDE) Thursday, July 27 at 6:30 a.m. PDT.

Las Vegas Sands Corp. (LVS) Wednesday, Aug. 2 at 1:30 p.m. PDT.

Scientific Games Corp. (SGMS) Wednesday, Aug. 2 at 5:30 a.m. PDT.

MGM MIRAGE Inc. (MGM) Thursday, Aug. 3 at 8 a.m. PDT.

Progressive Gaming International Corp. (PGIC) Tuesday, Aug. 8 at 8 a.m. PDT.

WMS Industries Inc. (WMS) Wednesday, Aug. 9 at l:30 p.m. PDT.

THE INSIDER: A second major shareholder in Riviera Holdings Corp. (RIV) has announced it will oppose the sale of the company for $17 per share. Triple Five Investco LLC has called itself the third largest stockholder in RIV.

The Pittsbugh Penguins have rejected a bid of $170 million from Dallas Mavericks owner Mark Cuban and NFL Hall of Famer Dan Marino to buy the team. The Penguins have partnered with Isle of Capri Casinos Inc. (ISLE) in an effort to get a slots license.

Harrah’s Entertainment Inc. (HET) has increased its regular quarterly cash dividend to $0.40 per share. Payment will be made on Aug. 23 to shareholders of record on Aug. 9.

Isle of Capri Casinos Inc. (ISLE) has named Amanda Totaro to senior vice president of marketing.

Lottomatica, the Italian lottery company, is reviewing information regarding a probe by Texas officials of GTECH Holding Corp. (GTK) and its business practices in Brazil, Poland and the Czech Republic. Lottomatica is in the process of acquiring GTECH for $35 a share.

Churchill Downs Inc. (CHDN) has sold Ellis Park racetrack to retired Louisville, Ky., businessman Ron Geary.

Magna Entertainment Corp. (MECA) has appointed Joe De Francis to its board of directors. De Francis and his sister inherited the Maryland Jockey Club from their father and sold the company to Magna Entertainment. Also, Magna said it had named Bill Murphy as the vice president and general manager of Gulfstream Park.

Gaming Partners International Corp. (GPIC) has dismissed its independent auditors, Deloitte & Touche, and replaced them with Moss Adams LLP.

Analysts at CIBC World Markets have upgraded the shares of MGM MIRAGE Inc. (MGM) and Penn National Gaming Inc. (PENN). And analysts at Morgan Joseph have upgraded the shares of Ameristar Casinos Inc. (ASCA).

Scientific Games Corp. (SGMS) has been awarded a contract to supply instant tickets and related services to the South Carolina Education Lottery.