Harrah’s Entertainment Goes Public With IPO

I'm surprised there's been no thread started on this recent news, correct me if someone already posted.

Harrah's

There's always lots of bad-mouthing of Harrah's gaming and comp policies on many of the threads.

Is there a coming uptick in the economy?

I didn't know about it but it's neither here nor there for me also. I wouldn't look at what Harrahs does as any official sign of the economy improving either.

However, with respect to the constant bad-mouthing of Harrahs, it's mainly done by people who whine about pay tables and Diamond Lounge policies, but blink and they'll produce their Seven Stars cards and tell the world about their upcoming stays.

I'd say, if Harrah's is going public with their stock, that means they need cash, and would be a sign that the economy (or, at least, the gaming industry) is NOT improving, and they feel like they've cut their costs as much as possible for now.

While I would not PLAY at Harrah's, I would certainly consider INVESTING in Harrah's (and no, I am neither diamond, not platinum, nor 7-star, nor any other non-plebian tier level there).

Just a reminder:

19 Dec, 2006 Agreement and Plan of Merger written
05 Apr 2007 Harrah's stockholders approved the merger and merger agreement at a special meeting
28 Jan 2008 Harrah's Entertainment, Inc. Announces Completion Of Merger (stock no longer traded)

All these plans were made at a time when Vegas and Harrah's were booming. As a result of this merger and taking the
company private Harrah's was loaded with $19 billion in debt.

The taking of the company private coincided with the 2nd mont of the recession, and the 3rd month of downturn in Vegas
gaming revenue.

In the last three years, the only move that Harrah's was able to do was to acquire Planet Hollywood as it was going bankrupt.

All plans to expand into Asia or to improve properties in Vegas were put on hold due to the crushing debt.

Do you really want to consider investing in this company? All that debt is still there, and Wynn and Sands Corporation have a
huge head start in Asia. Are you convinced that building some new restaurants and a ferris wheel will turn around Vegas?

Total Revenue
CY2007 revenue $10,825.2 profits $619.4 Assets $23,357.7
CY2008 revenue $10,127.0 profits -$5,197.2 Assets $31,048.6 BIG WRITE OFFS THIS YEAR
CY2009 $ 8,907.4 profits 827.6 Assets $28,979.2
CY2010 revenue down 2.6% from 2009

Although August was extremely good new for Vegas gaming revenue, you may want at least two back to back good months.

Quote: pacomartin

Do you really want to consider investing in this company? All that debt is still there, and Wynn and Sands Corporation have a huge head start in Asia. Are you convinced that building some new restaurants and a ferris wheel will turn around Vegas?

The question, for those considering investing in Harrah's, is whether a few restaurants and a Ferris wheel will turn around Harrah's. What happens to the rest of Vegas is of secondary importance.

As to the rest I'm not an expert. But if the stock goes cheaply in the IPO, then it's a small risk to invest in it for the long term.

I owned Harrah's stock for about two years from 2000 to 2002. During that time it did extremely well, and kept doing well after I foolishly (in retrospect) sold it. I criticize Harrah's frequently for lousy game rules and penny pinching. However, it is hard to argue with success.

Along with the crushing debt, Harrah's seems awfully heavily invested in one market: Las Vegas. Of course, Vegas is probably the second best gaming market out there, but that "putting all your eggs into one basket" thing comes to mind.

I've actually been considering buying some shares of a gaming company recently; mostly as a personal hobby since my 401(k) and IRA are rather boring (decidedly much less riskier than individual stocks, but still boring). Harrah's gargantuan debt is a bit of a concern, and like I mentioned above, I don't like the idea of choking up Vegas with even more casinos, so I've been looking at some other ones; Ameristar Casinos has a local casino, and they seem stable enough, and Penn National Gaming is building a casino in the area right now. Unfortunately, Penn also apparently had a net loss of about $265 million last year...

Quote: Wizard

I owned Harrah's stock for about two years from 2000 to 2002. During that time it did extremely well, and kept doing well after I foolishly (in retrospect) sold it. I criticize Harrah's frequently for lousy game rules and penny pinching. However, it is hard to argue with success.

I don't give them all that much credit. Any casino that DIDN'T make a killing during the boom years (roughly, 1995-2004, with a burp at 9/11) would had to have been run by retarded chimpanzees. The key is what they did when things started to go south--they kept up their strategy of trying to buy every casino on the planet, with leveraged debt that was more and more smelly with each new acquisition, as their debt ratio ballooned. At last Gary Loveman wept, because in the manner of Alexander the Great, there were no more casinos to conquer. Then the infallible strategy of drastically increasing the price of everything and making the gambling orders of magnitude worse was implemented.

The strategy of buy-it-and-gouge-'em-to-keep-the-cash-flow-going would have worked if the market had continued to grow at the pace it had in the boom years. But of course, it never could have (recession or no recession). The debt chickens came home to roost. It is kind of ironic that Harrah's committed the same blunder that mortgage banks did--they assumed that growth would continue indefinitely, at the same rapid pace, and that that growth would help to cover a multitude of fiscal sins. Well, when a Martingale like that collapses, it collapses big time. Harrah's is STILL over $31 billion in the hole. That number would give me pause before I bought any of their stock.

There's a suspicious view I generally have of any IPO. Up to that point, the company considered itself valuable enough that it didn't want to sell any of itself to the public. Now, it suddenly does want to. If the IPO is at, say, $50, that means that Harrah's would rather have $50 than one share of its stock. That, in turn, tells me that I, as well, would rather have the $50.

Quote: Wizard

I owned Harrah's stock for about two years from 2000 to 2002. During that time it did extremely well, and kept doing well after I foolishly (in retrospect) sold it. I criticize Harrah's frequently for lousy game rules and penny pinching. However, it is hard to argue with success.

I see their penny pinching in the form of reduced benefits in their player's lounges (or their closing of such) and their very poor pay tables on the vp games that rival out-of-the-way Indian casinos one might stop at on a trip to Grandma's. That said, I keep my arguing down to a manageable level because of their very generous diamond card benefits, where they offer free flights to several of their properties around the country, gift cards, cash coupons, etc. etc. If you're an AP then all this may still not be attractive to you, but to a player like myself these unexpected perks do make up for their crummy games.

I regularly get offers to fly 2 people to AC, Reno, New Orleans, and Laughlin with the rooms comped of course, but I only have time to take advantage of maybe one of them a year. I do think that they are taking on too much in this economy though, so I would not be buying any of their stock these days.

Quote: ElectricDreams

Harrah's seems awfully heavily invested in one market: Las Vegas. Of course, Vegas is probably the second best gaming market out there, but that "putting all your eggs into one basket" thing comes to mind

For the record, according to the Harrah's website, they have 8 hotel casinos in Las Vegas, out of 34 nationwide.

While I agree that there is not enough balance, I simply wanted to point out that Harrah's has several 'baskets'.