Majestic Research

Bloomberg

Harrah's Earnings Rise on More Gambling at Las Vegas Properties

By Carol Wolf and Oliver Staley
Published: May 08, 2007

Harrah’s Entertainment Inc., which last month approved its $17.1 billion sale to two private equity firms, said profit rose 1.6 percent on increased wagering at its Las Vegas Strip properties such as Caesars Palace and the Paris.

First-quarter net income for the world’s largest casino company rose to $185.3 million, or 98 cents a share, from $182.4 million, or 98 cents, a year earlier the company said today in a statement. Revenue increased 13 percent to $2.66 billion, the company said.

Harrah’s agreed in December to be acquired by Apollo Management LP and TPG Inc., which were attracted to its ability to generate cash and real estate. Harrah’s has improved its profitability and gambling revenue at Las Vegas properties such as Caesars and Bally’s that it acquired in 2006 from Caesars Entertainment Inc, according to Matt Jacob, an analyst at Majestic Research in New York.

“The former Caesars properties are driving some of the growth,” Jacob said yesterday. “They seem to be ramping up as they are able to attract better customers.”

Nine analysts estimated profit of $1.01 a share, according to a Bloomberg survey, while six forecast $2.46 billion in revenue.

Shares of Harrah’s, based in Las Vegas, slipped 47 cents to $85.21 in New York Stock Exchange composite trading yesterday. They have increased 28 percent since Sept. 29, the last day of trading before the sale was announced. Rivals MGM Mirage gained 61 percent over that time, while Las Vegas Sands Corp. has climbed 17 percent.

Harrah’s owns 42 casinos in eight states and operates four U.S. tribal casinos and one Canadian property. Overseas, it owns 11 casinos in Egypt, South Africa, the U.K. and Uruguay and is opening locations in the Bahamas, Slovenia and Spain.

It has grown through acquisitions under Chief Executive Officer Gary Loveman, including the 2005 purchase of Caesars Entertainment Inc. for $6.79 billion and the December buyout of London Clubs International Plc, an operator of 10 casinos in the U.K. and Africa, for $570 million.