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Harrahs Earnings for 2nd Quarter Off-mark
Gaming giant Harrah's Entertainment said Thursday that its earnings for the second quarter have been affected by development costs and other factors related to expanding a company with domestic and international interests.
Harrah's revenue jumped up 67 percent in the first quarter that ended June 30 to $2.47 billion as compared to $1.47 billion last year. In the second quarter of 2005, the company's revenue was collected for only 17 days from the casinos that it acquired when it doled out $9 billion on its acquisition of Caesar's Entertainment.
Harrah's said that its net income in the quarter amounted to $129 million, up 22 percent from $106 million in the same period a year ago.
The company is projected to have earned 95 cents a share, up 86 cents per share a year ago, once the earnings per share were adjusted to account for the company expenditures. Thomson First previously conducted a poll wherein analysts thought that Harrah's would earn $1.02 per share in the quarter.
Charles Atwood, Harrah's chief financial officer, said that the company bought back and refinanced $750 million in debt during the quarter, thus the lower share earnings. It was also affected by an increase in the number of shares outstanding resulting from stock issued for the Caesars acquisition.
"We believe the sell-off in Harrah's is a knee-jerk reaction to an earnings per share miss," gaming analyst Steven Wieczynski from Stifel, Nicolaus Capital said in a note to investors. "On a relative basis, we believe Harrah's shares are now undervalued and we would accumulate shares at this level, all else being equal."