Trump and Harrah's report loss, casino sector shaky
NEW YORK (Reuters) - Casino operators Trump Entertainment Resorts Inc and Harrah's Entertainment Inc reported quarterly losses on Friday as the economic slowdown continued to savage the gambling industry.
The recently booming sector is now facing a wave of restructuring or even bankruptcies, as it struggles to finance new projects and casinos see customers slash spending.
"Our average spend per patron has fallen significantly during the fluctuations of the financial market and gas prices," Trump Chief Executive Mark Juliano said in a statement.
The Dow Jones U.S. Gambling index has tumbled 77 percent from its lifetime high in October last year, when several years of sharp growth in Las Vegas and Macau, Asia's gambling enclave, started to show signs of faltering.
In the last year, casino operator Tropicana Entertainment LLC has filed for bankruptcy while a deal to take Penn National Gaming Inc private fell apart as the sector turned sour.
Las Vegas Sands Corp, which only last year opened the world's largest casino in Macau, is the most high-profile victim. Its shares have halved in value this week alone, after its auditor expressed doubts about the company's financial health. The company is considering ways to raise capital.
TRUMP LOSS
Trump, chaired by property magnate Donald Trump, posted a third-quarter net loss of $139.1 million, or $4.39 per share, compared with a year-earlier profit of $6.6 million, or 21 cents per share.
Net revenue fell to $198.3 million from $216.6 million.
"The negative effects of the slowdown in the U.S. economy, especially consumer spending, had a significant adverse impact on our results during the quarter," CEO Juliano said.
The company's 21 highest-paid employees have agreed to a voluntary 5 percent salary reduction, effective December 1, the company said, as it looks to cut costs.
Shares of Trump, which was created out of a bankruptcy restructuring in 2005, fell 12 percent to 55 cents on the Nasdaq.
Harrah's Entertainment, the world's biggest gaming operator with seven Las Vegas casinos, reported a third-quarter net loss of $129.7 million, compared with a year-earlier profit of $244.4 million.
"The economic upheaval weighing on the country continued to impact our results throughout the third quarter," Chief Executive Gary Loveman said in a statement.
"While we're hopeful the federal government's recent actions to restore order to the financial markets may lead to an eventual economic recovery, there is no certainty as to its timing," Loveman added.
Private equity firms Apollo Global Management and TPG Capital LP bought Harrah's Entertainment in January for $31 billion, including about $12 billion in debt, just after the peak of the leveraged buyout bubble.
The timing has proved unfortunate. Casino companies have suffered over the past year as the gambling boom in Las Vegas has fizzled, tight credit markets have jeopardized growth plans and the Chinese government has acted to slow down the booming Macau market.
The price of Harrah's leveraged bank loans on the secondary market fell about 50 basis points on Friday, to around 69 cents on the dollar, according to Reuters Loan Pricing Corp -- a sign that investors view the company as more risky.
(Reporting by Mark McSherry, Bill Rigby; Editing by Lisa Von Ahn and Matthew Lewis)
