Penn National Gaming - hungry like a wolf?

If you’re an investor, the conference call a company holds with analysts after an earnings report is a necessary but usually dull exercise.

Necessary, because often executives explain the dense text that fills most earnings releases. Dull, because often the discussion is full of jargon and heavy on accounting.

And then there is Penn National Gaming Inc.

Peter M. Carlino, chairman and CEO of the Wyomissing-based operator of racetracks and casinos, doesn’t mince words.

Last week, following the release of the company’s third-quarter earnings, Carlino said:
“Broadly, performance has been … changed from, I guess terrible to … what would the highlight word be? Less than wonderful?”

Like most other casino operators, Penn National reported weak operating results for its third quarter. In fact, president and chief operating officer Timothy Wilmott said, “September was probably the worst month I’ve ever seen in my 20-plus years in the industry.”

Penn National’s analyst calls are as likely to include lively discourses about political battles over gambling legalization or smoking bans as operating margins and capital expenditures.

Last week, in response to a question about whether Penn National would be looking to take advantage of other casino companies’ financial distress, Carlino reached for a naturalistic metaphor. He said he thinks of his company as a wolf.

“Picture a great plain and kind of a low rise of a hill and kind of the wolf sitting there, kind of staring out at the horizon, looking for one of two things. Either weakness someplace that he can go and pounce on, or on the other hand, looking defensively at his territory,” he said.

Given that on Thursday, Penn National received $1.25 billion from the sale of preferred stock, the image of a wolf is more than apt. The financing was a beneficial outcome of the July collapse of its $6.1 billion purchase by two private-equity groups, Fortress Investment Group L.L.C. and Centerbridge Partners L.P.

Flush with cash but faced with an uncertain economic outlook, Penn National will bide its time surveying its territory.

Penn National’s common stock rose 51 percent stock last week to close at $19.26. Among local stocks, that rise was second only to vodka maker Central European Distribution Corp., which saw shares rise 55 percent to close at $28.79.


Last week in my column on explaining the economic turmoil to middle-school students, I mentioned a publication on the U.S. State Department’s Web site called “An Outline of the U.S. Economy.”

Lots of readers called and e-mailed me because they weren’t able to find it there. So here’s the exact address you need to find it:

Or using Google, just type “outline of the U.S. economy” in the search field. It should be the first result.

Nobel Cause

Nobel Learning Communities Inc. will hold its annual shareholders meeting Thursday morning at the corporate headquarters in West Chester.

Not on the agenda is an unsolicited offer by Knowledge Learning Corp. to acquire the operator of private schools. But given that ex-junk bond king Michael Milken is a major investor in both companies, the topic is bound to come up.

In September, Portland, Ore.-based Knowledge Learning offered to buy Nobel for $17 per share. Nobel shares closed Friday at $13.52. A committee of Nobel’s independent directors is evaluating the offer with the help of financial adviser J.P. Morgan Securities Inc.


Today: Kenexa, Orthovita, Pennsylvania Real Estate Investment Trust

Tuesday: Harleysville Group, Marlin Business Services, PPL, West Pharmaceutical Services

Wednesday: Aqua America, Brandywine Realty Trust, Checkpoint Systems, J&J Snack Foods, Penn Virginia, Radian Group, Sunoco

Thursday: Entercom Communications, Hersha Hospitality Trust, ICT Group, K-Tron International

Friday: PHH


The last several months have been terrible. Terrible for the credit markets, terrible for the financial system, terrible for our company.

- Jay Sugarman, chairman and CEO of iStar Financial Inc., on an earnings call Oct. 30 with analysts. Sugarman is a key investor in the Major League Soccer franchise planned for Chester.

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