Atlantic City Casino Profits Plummet
ATLANTIC CITY - (Associated Press) In yet another measure of how mightily Atlantic City's 11 casinos are struggling this year, gross operating profits at the gambling halls fell by nearly 23 percent in the third quarter.
Figures released by the state Casino Control Commission showed that gross operating profits totaled $318 million for the quarter, compared with $412.5 million for the same period in 2007.
Gross operating profits represent earnings before interest, taxes, depreciation, amortization, and charges from affiliates, and is a widely used measure of profitability in the casino industry.
After all those expenses, the casinos reported a net loss of $78.5 million, compared to a profit of $120.8 million in the third quarter a year ago.
The Borgata Hotel Casino & Spa led the city with gross operating profits of $60.9 million, down 16.9 percent from last year. Harrah's Resort Atlantic City reported profits of $52.2 million, down 1.7 percent.
Microsoft had offered as much as $33 a share for Yahoo, an effort to boost its share of Internet searches and close the gap with Google Inc. in online advertising. While Microsoft may return to discussions, there's no urgency now, said Martin Pyykkonen, an analyst with Wunderlich Securities in Denver.
"If you look at it from Microsoft's standpoint, what's the rush?" said Pyykkonen, who advises selling Yahoo shares. "Microsoft probably high-fived itself to say, "Good thing we didn't buy them."'
Microsoft, based in Redmond, Wash., declined $1.33, or 6.8 percent, to $18.29. The shares have dropped 49 percent this year.
Yang, who will step down when his replacement is found, has said he is open to new talks. Microsoft walked away from takeover discussions earlier this year after Yang rejected the $47.5 billion offer. Sunnyvale, Calif.-based Yahoo also spurned Microsoft's proposal to buy just its search unit in June.
Even if Microsoft did buy Yahoo, it would have less than half of Google's share of Internet searches. Mountain View, Calif.-based Google handled almost two-thirds of U.S. queries in September, according to ComScore Inc., a research firm in Reston, Va. Yahoo had 20.2 percent, while Microsoft had 8.5 percent.
U.S. online advertising spending may grow 20 percent this year to $25.5 billion, according to Collins Stewart Plc. The firm revised its forecast last month from an earlier projection of 23 percent growth, citing economic conditions.
After rejecting Microsoft's earlier offers, Yahoo entered an agreement with Google that would have put some of that company's ads on Yahoo's Web pages. Google backed away from the deal this month after the Justice Department threatened to block it. Yahoo expected the partnership to bring in as much as $450 million in operating cash flow in the first year.
Yahoo also has held talks with Time Warner Inc.'s AOL since April about a combination. An acquisition of AOL would bring more so-called display ads, such as banners, which are less lucrative than search ads.
Caesars Atlantic City ($48.6 million) was down 22.3 percent; Bally's Atlantic City ($43.5 million) was down 19.2 percent, and the Trump Taj Mahal Casino Resort ($35.4 million) was down 13.6 percent.
The Showboat Hotel Casino ($24.3 million) was down 34.8 percent; the Tropicana Casino and Resort ($22.4 million) was down 42.8 percent, and Trump Plaza Hotel Casino ($16.6 million) was down 14.6 percent.
Trump Marina Hotel Casino, which is in the process of being sold, was down 35.8 percent to $7.6 million.
But the truly staggering declines were posted by a pair of casinos that have struggled more than any other this year. Resorts Atlantic City, Atlantic City's first casino which opened 30 years ago, was down 62.3 percent, to $3.3 million. Its sister property, the Atlantic City Hilton Casino Resort also had profits of $3.3 million, down a whopping 73.3 percent from last year.
Hotel occupancy increased in the third quarter this year, to 1.5 million occupied room nights, up from 1.3 million a year ago. That's due to a new hotel at the Borgata, The Water Club, as well as Harrah's new Waterfront Tower, both of which debuted this year.
From January to September, gross operating profits at Atlantic City's casinos were down 19.5 percent to $809 million.
