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Analysts Cautious on Casinos' Q1 Earnings

17 April 2001

LOS ANGELES, California –April 17, 2001 –As reported by Reuters: "The major casino operators are expected to report first-quarter earnings that are flat or up only modestly as the nation's economic slowdown spreads to the leisure sector, analysts said on Tuesday.

"…Most analysts said they are factoring modest year-on-year growth in their first-quarter estimates to allow for the impact of the nation's economic slowdown.

"Companies should be helped by hotel revenue growth in the 2 percent to 3 percent range in Nevada, plus gaming revenue growth in the 7 percent to 13 percent range in the Midwest, said Brian Egger, an analyst at Credit Suisse First Boston. But those gains should be offset by relatively flat performance in Atlantic City and higher energy costs for many casinos, he added.

"…The only good news is that few new casinos are being built and competing with the established players, meaning the industry should be able to weather the emerging pressures, he said.

"Jeff Logsdon, an analyst at Gerard Klauer Mattison, said he has also been conservative in his estimates for the major casino companies.

"He said one bright spot for casino operators in the first quarter was the strong attendance for conventions in Las Vegas. While Las Vegas has felt the pinch of the economic slowdown, Logsdon added that the impact has been relatively minor so far.

"…Logsdon also said the summer months could be `more challenging' for Las Vegas in particular since conventions are fewer and casinos depend more on discretionary tourist business during that time of year…"

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