Analysts’concerns that the growth of California Indian casino gambling would have a major impact on northern Nevada casinos offered no great surprise to officials of Harrah’s Entertainment Inc.(HET).
In announcing the financial results for the second quarter of the fiscal year, President and COO Gary Loveman said three factors affected earnings which were listed at $0.49 a share compared to last year’s $0.40 a share: low-hold at the Rio Hotel/Casino; competition in the Schreveport, La., and Chicago, Ill., areas, and the nation’s slowing economy.
But viewing the economic conditions, he said the worse area was northern Nevada where the company had seen “significant reductions.” He said “that market is in trouble” and the properties in northern Nevada appear “to be under siege.”
A recent study by Bear Stearns analysts indicated revenues in the Reno-Sparks area could plunge more than 21 percent within the next three years.
As for the low-hold at the Rio, Loveman placed the responsibility on high-end play that is being phased out. He said the new management team would focus its attention more on increasing slots volume and spend less time on the costly attempts at attracting the high-end player.
Chairman and CEO Phil Satre emphasized that the current fiscal year would be better than last year, “and the results so far indicate this,” and the results for fiscal 2002 would be better than the current year.
Shortly after the financial report teleconference, Harrah’s announced that it had been notified by federal authorities that the Federal Trade Commission had terminated its review of the proposed purchase by Harrah’s of Harveys Casino Resorts from Colony Capital Investors. The purchase is expected to be completed during the third quarter of the current fiscal year.
International Game Technology
Records for operating profit, net income and earnings per share were set at International Game Technology (IGT) during the third quarter ended on June 30.
Net income for the quarter reached $56.7 million or $0.73 per diluted share that compared favorably to last year’s $37.6 million or $0.51 per diluted share.
During the reporting period, IGT said domestic replacement sales reached a record high of 10,500 units and that the replacement demand continues to be driven by the combination of an aging installed base, an improving suite of new video games, and the growing appeal of the new ticket-in/ticket-out technology.
At the end of the third quarter, according to CEO Tom Baker, approximately 18,500 machines were operating on various ticket-in/ticket-out systems of which 78 percent were operating on IGT’s own EZ Pay system.
Majestic Star Casino LLC, owned by Detroit entrepreneur Don Barden, reported improved results for its Gary, Ind., riverboat during the three-month period ended on June 30.
Net income for the period was $296,000 compared to a loss before extraordinary items of $793,000 in the corresponding period of a year ago.
Barden, who is in the process of acquiring three casinos operated by the Fitzgerald Company for $149 million, said he viewed the company as having made “great strides over the past year in expanding its slot business.” He said his company continued “to outpace the Northwest Indiana marketplace.”
Barden said he believed he would close on the Fitzgerald purchase during the fourth quarter of this year.