Boyd Gaming reports net income jump

Thursday, July 22, 1999 | 11:11 a.m.

Boyd Gaming Corp. of Las Vegas said second-quarter net income rose to $9.7 million, or 16 cents a share, from $4 million, or 7 cents a share, in the 1998 second period.

Revenue slipped to $241.9 million from $245.5 million, mainly because of the closure of Sam's Town Kansas City last July.

On a same-store basis, revenues rose 2.1 percent in the latest quarter from a year ago, as nine of Boyd's 11 properties posted higher earnings. Only the Stardust on the Strip and the Eldorado in Henderson recorded cash-flow declines. The Stardust is undergoing $25 million of renovations that have disrupted some business, the company said.

Boyd's downtown Las Vegas properties -- Main Street Station and the California and Fremont hotel-casinos -- posted a 31 percent gain in cash flow, due mostly to cost-cutting measures, while Sam's Town Las Vegas on the Boulder Strip recorded slight revenue and cash-flow increases.

The company also continued trimming debt, paying off another $5 million in the latest quarter and bringing the total debt reduction to $110 million over the last six quarters. As a result, net interest expense was $2.1 million lower in the latest quarter than in the year-earlier period.

Boyd, with operations in Nevada, Mississippi, Illinois and Louisiana, has agreed to acquire the Blue Chip riverboat casino in Michigan City, Ind., and is developing a $750 million joint venture hotel-casino project in Atlantic City with Mirage Resorts Inc.

"While we believe there exists short-term profit potential for investors in shares of Boyd, we remain concerned about risks associated with the company," gaming analyst Jason Ader of Bear Stearns & Co. said.

The risks include "lost revenues from the contract expiration of Boyd's Native American casino in Mississippi in July 2001, highly competitive conditions in several of its other markets, the likelihood of delays in Atlantic City, and the company's limited float," Ader said.

"However, we believe the company has been able to make several low-multiple acquisitions including the Blue Chip casino, which should enable it to recognize significant upside.

"Given these issues and our concern about future growth prospects, we maintain our 'neutral' rating on shares of Boyd," he said.