Friday, Oct. 27, 2006

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Harrah's misses expectation in third quarter

By Sarah Polson

While third-quarter profits rose 5% for Harrah's Entertainment, Inc., the company still missed analysts' profit expectations because of poor performance in Atlantic City. A city-wide casino shutdown because of government budget issues put a dent in Harrah's casino profits for the quarter.

Analysts had been expecting earnings of 99¢ per share of Harrah's stock for the company's third quarter. However, the company produced 95¢ per share instead.

Harrah's, which also owns and runs the World Series of Poker, did see their net income climb to $177.2 million, up from $169 million a year ago. Revenue from the quarter was also up 11% to $2.5 billion.

The company's "Achilles' heel," according to Harrah's Chief Executive Gary Loveman, was the three-day shutdown of casinos in Atlantic City in July. Because New Jersey hadn't passed a new budget agreement, non-essential government workers, including state casino inspectors, were ordered not to work, and the casinos can't operate without the inspectors.

The loss of three days along with the following move by competitors to increase their marketing drives caught the company by surprise, and it just couldn't catch up for the quarter.

Related articles:

New Jersey Casinos Reopen
New Jersey Casinos Close Today
Atlantic City Casinos May Close Wednesday

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