Pinnacle Entertainment might abandon project

Mar 4, 2008 7:00 AM

Earnings by Ray Poirier | A $35 per share price target was quickly reduced to $25 per share last week following the announcement that the current credit crunch might force Pinnacle Entertainment Inc. (PNK) to abandon its $2 billion casino project in Atlantic City.

The announcement was made by Chairman and CEO Dan Lee during the company’s conference during which it announced its fiscal report for the fourth quarter.

"We’re still at the point of compiling our dreams of what can go into that (Atlantic City) property, and they’re pretty big," said Lee. However, he added that "the credit market is essentially closed…We’re not going to go broke building in Atlantic City."

For the reporting period, the company said it loss $19.2 million or $0.32 per share compared with last year’s loss of $5 million or $0.10 per share.

Two contributing factors, the company said, were the pre-opening and development expenses related to its Lumiere Place Casino in St. Louis and an increase in the depreciation and amortization costs.

Gaming revenue for the period increased to $194.4 million from the $183.9 million reported in the comparable quarter of 2006.

For the full year, the company said it had a loss of $1.4 million or $0.02 per share compared with the profit of $76.9 million or $1.56 reported a year earlier.