Big Wins for the Casinos

Harrah's and MGM both say first-quarter revenue surges.
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Casino operators

Harrah's Entertainment

(HET)

and

MGM Mirage

(MGM) - Get Report

were both winners in the first quarter, as each company reported a big increase in revenue.

At Harrah's, first-quarter revenue rose 93.3% to $2.4 billion. Property earnings before interest, taxes, depreciation and amortization doubled to a record $690.1 million.

The company had adjusted earnings from continuing operations of $1.02 a share, up from 83 cents in the 2005 first quarter. Analysts surveyed by Thomson First Call were expecting a profit of 92 cents a share and revenue of $2.25 billion.

Net income jumped to $182.4 million, or 98 cents a share, from $103.8 million and 90 cents a share a year ago. Harrah's attributed the gains to contributions from the Caesars Entertainment properties that were acquired last June and to increased visitation and spending by members of the company's customer-loyalty program.

"The 2006 first-quarter produced the best operating results in Harrah's history due to continued successful execution of an organic-growth strategy that has enabled us to record same-store sales growth in all but one of the past 34 quarters," said Gary Loveman, chairman, president and chief executive of Harrah's Entertainment.

For MGM, the operational strength at the company's resorts was the main force behind the revenue increase of 56% to $1.9 billion for the quarter. Property EBITDA was $629 million.

The company reported earnings of 49 cents a share for the first quarter, compared with 38 cents in the year-ago period. The latest results include costs of 5 cents a share for stock-compensation, preopening and startup expenses of 2 cents and property-transaction costs of 5 cents. Starting with the quarter just reported, MGM will no longer present adjusted earnings.

"The first quarter was another strong operating quarter for MGM Mirage," said Terry Lanni, the company's chairman and CEO. "We continued to build on our foundation of world-class resorts, and we also made significant progress on meaningful development projects which we believe will leverage our strengths -- management, brands, financial discipline -- and lead to sustained growth for many years to come."

MGM said it expects second-quarter earnings to rise to 50 cents a share, including 4 cents of stock-compensation costs, from 48 cents a year ago.

Shares of Harrah's were up $1.26, or 1.6%, to $79.53, and MGM gained 51 cents, or 1.2%, to $44.45.