PENN Entertainment (NASDAQ:PENN)
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TAKING THE PULSE: The recession has turned the cards cold for casino operators, especially those in tourist destinations. Holding an edge are companies operating in regional casino markets, where people can place bets without travel and hotel costs.

Gambling revenue in Las Vegas fell 9% for the first 11 months of 2008. In Atlantic City, N.J., casino revenue dropped 7.6%, making 2008 the second down year in a row after gains every year since gambling was legalized in 1978. Companies with major operations in both cities have been forced to take aggressive actions to add liquidity. They also face more competition as new properties still under development open. But some projects have been shelved for the time being amid the economic woes.

Once seen as an offset for U.S. weakness, Macau, has run into its troubles. Gambling revenue there rose 2.6% in the fourth quarter from a year earlier but fell 7.3% from the previous quarter, the city's Gaming Inspection and Coordination Bureau, as the Chinese government last fall further tightened restrictions on mainland visitors entering the fast-growing island resort.

 
   COMPANIES TO WATCH: 
 
   Penn National Gaming Inc. (PENN) - reports Feb. 5 
 

Wall Street Expectations: Analysts polled by Thomson Reuters project earnings of 25 cents a share on revenue of $571.9 million. A year earlier, Penn National reported net income of 36 cents on revenue of $585.8 million.

Key Issues: The operator of 19 casino and horse-racing facilities in 14 states and Ontario benefits from being in a variety of smaller markets, although the recession has damped earnings. Penn National, which walked away with $1.48 billion in investments and a breakup fee when its proposed $6 billion leveraged buyout fell through in July, has said it plans to buy casino assets.

 
   Boyd Gaming Corp. (BYD) - reporting date to be announce 
 

Wall Street Expectations: Analysts are looking for earnings of 14 cents a share on revenue of $424 million, down from 35 cents and $478.6 million, respectively.

Key Issues: As one of the oldest Las Vegas gambling companies, Boyd's customers include many locals, who are struggling with declining home values and job losses. Also a partner with MGM Mirage (MGM) in Atlantic City's Borgata, Boyd faces new competition in both markets. The company has delayed indefinitely its $4 billion-plus Echelon Place project in Las Vegas and has been using credit lines to repurchase senior notes at a discount.

 
   Wynn Resorts Ltd. (WYNN) - reporting date to be announced 
 

Wall Street Expectations: The company is seen earning 53 cents a share on revenue of $735.4 million. A year earlier, Wynn reported net income of 57 cents on revenue of $711.3 million.

Key Issues: Wynn's new $2.3 billion, 2,000-room Encore hotel-casino, attached to the three-year-old Wynn Las Vegas on the Strip, opened just before Christmas and a 400-room expansion to Wynn Macau will open at the end of this year. The company raised $350 million in a stock offering in November and has one of the best balance sheets of the major casino operators because it has been cautious about developments.

 
   MGM Mirage (MGM) - reporting date to be announced 
 

Wall Street Expectations: Analysts anticipate earnings of 22 cents a share on revenue of $1.76 billion. The prior year's net income was $2.85 a share, which included a $2.33 gain from selling 50% of CityCenter, and revenue of $2.11 billion.

Key Issues: MGM Mirage, which has a big presence on the Las Vegas Strip, has been cutting costs aggressively. It also amended its credit line, sold $750 million in debt and agreed to sell Treasure Island in Las Vegas for $775 million. The moves come as it cuts costs at the giant CityCenter project on the Strip, which will include some 4,000 rooms. It will also take a $1.2 billion write-down related to its 2005 purchase of Mandalay.

 
   Las Vegas Sands Corp. (LVS) - reporting date to be announced 
 

Wall Street Expectations: Analysts forecast earnings of 4 cents a share on revenue of $1.16 billion. A year earlier, Sands reported net income of 11 cents on revenue of $1.05 billion.

Key Issues: The company, best known for the Venetian resort in Las Vegas, has laid off workers, eliminated management bonuses and suspended construction on projects in Macau and Las Vegas as billionaire owner Sheldon Adelson injected $1 billion into Sands. The company said in early November it would likely be in violation of debt covenants. It subsequently raised $2.1 billion, with nearly $500 million of that coming from Adelson.

(The Thomson Reuters estimate and year-ago net may not be comparable due to one-time items and other adjustments.)

-By Kathy Shwiff, Dow Jones Newswires; 201-938-5975; kathy.shwiff@dowjones.com

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