Harrahs - Making the $$$

LAS VEGAS -- Harrah's Entertainment Inc. said Wednesday its third-quarter profit rose 5 percent as an incentives program drove players to its properties in Las Vegas, but missed analysts' expectations because of poor performance in Atlantic City.

Net income at the world's largest casino company climbed to $177.2 million, or 95 cents per share, from $169 million, or 91 cents per share, a year ago. Earnings from continuing operations rose 4 percent to $178.3 million, or 96 cents per share, from $171 million, or 92 cents per share. Revenue for the quarter increased 11 percent to $2.51 billion. On average, analysts were expecting earnings of 99 cents per share on sales of $2.41 billion, according to a poll by Thomson Financial.

A three-day government shutdown of casinos in Atlantic City in July and a subsequent move by competitors to ramp up marketing drives caught Harrah's off guard, chief executive Gary Loveman told analysts in a conference call. "Clearly, Atlantic City was our Achilles heel this past quarter," he said. "We believe our thorough review will enable us to regain lost ground." The company did not make any comments about a buyout bid it announced this month by two private equity firms, Texas Pacific Group and Apollo Management, other than to say a special committee of non-management directors continued to appraise the offer.

Harrah's said it was offered $15.05 billion, but the bid was reportedly raised to more than $15.5 billion after Harrah's rejected the original offer. The transaction would be the biggest deal ever for a casino operator and the fifth-largest leveraged buyout in history. Its stock rose 55 cents to $74.50 on the New York Stock Exchange in late morning trading Wednesday. Revenue at properties open at least a year climbed 8 percent. The comparison includes properties obtained in the Caesars Entertainment Inc. acquisition, but excludes sites closed for all or part of the periods due to hurricane damage sustained in last year's third quarter. Las Vegas resorts sales jumped 21 percent in the quarter to $812.4 million from $670.1 million, helped by higher visits by members of the Total Rewards customer-loyalty program and the World Series of Poker held at the Rio hotel-casino in July and August. A

tlantic City revenue edged down 0.3 percent to $560.2 million from $562.1 million.