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Analysts Like the Earnings News from Park Place Entertainment

3 May 2000

Analysts were delighted with the results announced Tuesday by Park Place Entertainment (NYSE: PPE), the world's largest gaming company. The company earned $52 million in the first quarter, thanks to good results at its casinos in Atlantic City and its Paris Las Vegas property.

Based on the earnings report, Joe Coccimiglio of Prudential Securities raised his 12-month target price for the stock, to $18 a share from $17. He continues to rate Park Place a "strong buy."

In his report this morning, Jason Ader of Bear Stearns called Park Place "a cash flow machine." He continues to rate it a "buy."

The company generated $180 million in free cash flow for the quarter, leading both analysts to expect more stock repurchases.

This was the first quarter since Park Place bought Caesars World on Dec. 29. The company said it still expects to see $50 million in annual cost savings from the acquisition.

Already, the company said, it has eliminated the top administrative departments at Caesars and consolidated the marketing networks between Caesars and Park Place.

New marketing programs led to increased play at the Caesars riverboat casino at the southern tip of Indiana, Park Place said. The company plans to complete a 500-room hotel there by late 2001.

In Biloxi, Mississippi, operating cash flow at the Grand casino was down 20 percent, the company said, because of new competition.

Coccimiglio added some detail to Monday's announcement that Park Place had acquired land in the Catskills, 90 minutes from New York City, to build and manage a tribal casino. He said the company has a five-year option to buy a 1,400-acre site for $65 million.

Park Place hopes to open a Foxwoods-style casino there as early as three years from now, but Coccimiglio believes it's likely to take longer. Numerous regulatory and legislative matters must be resolved before such a casino could open there.

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