Stock rises despite shortfall

Friday, April 14, 2000 | 11:21 a.m.

The stock of Harrah's Entertainment Inc. of Las Vegas advanced $1.37 this morning to $19.56 despite its Thursday announcement that first-quarter earnings will be as much as 17 percent less than analysts' estimates because it won less than usual at the Rio's table games.

The stock price in part was bolstered by Harrah's separate announcement that its board authorized a stock repurchase of as much as 10 percent, or 12.5 million shares. This is in addition to a 10-million share buyback program already in place.

The company said it will earn 24 cents to 26 cents for the quarter. Analysts expected it to earn 29 cents, according to estimates from First Call/Thomson Financial. Harrah's had profit from operations of $37.3 million, or 30 cents a share, in the year-earlier quarter.

The average "table hold," or amount the casino wins from gamblers, was 12.4 percent at its Rio casino in Las Vegas, down from the three-year average of 21 percent. The table business also increased 17 percent from the year-earlier quarter.

The two factors reduced earnings by 9 cents a share, the company said, but Chairman and Chief Executive Phil Satre noted that business fundamentals at the Rio remained strong. The company repeated its confidence that it would meet analyst expectations for both 2000 and 2001.

"It's all really based on table luck," said Joe Coccimiglio, gaming analyst with Prudential Securities. "Once they comforted people that business trends were strong, (investors) were able to see through the table luck and see the earnings were of good quality. They did a very good job of conveying that to investors."