Shares battered
when numbers fail

Aug 8, 2006 3:56 AM

Two Las Vegas Strip giants felt investors’ wrath last week following a second quarter report that failed to equal expectations. A third received a free pass although its numbers were weaker than expected.

Taking their lumps were the shares of Las Vegas Sands Corp. (LVS) and MGM MIRAGE Inc. (MGM) while Wynn Resorts Ltd. (WYNN) retained investors’ confidence even though the company again failed to show a profit.

MGM MIRAGE reported second quarter profit increased 4% to $146.4 million or $0.50 per share compared to last year’s $141.2 million or $0.48 per share in the comparable period. However, the consensus of gaming analysts had been looking for a profit of $0.53 per share.

Unexpectedly, six cents of the company’s profits resulted from sales of some condominium units at the newly completed The Signature at MGM Grand project that is located on the east side of the main property with a fronting on Harmon Ave.

Also providing major boosts were the results of a full quarter of Mandalay Resorts Group that was purchased last year and substantial improvement in the Bellagio.

Hurting the earnings was the loss of contributions from the Beau Rivage Resort in Biloxi, Miss., that was damaged and closed by Hurricane Katrina but will reopen on Aug. 29 and stock option expense of four cents per share. Added to that, according to company officials, was a slowdown being experienced in the company’s lower-end properties such as Circus Circus, Excalibur and the three hotel/casinos located in Primm, Nev.

Jim Murren, president and CFO, expressed surprise at Wall Street’s reaction to the company’s second quarter experience, pointing out that Bellagio alone made a greater profit than Las Vegas Sands and Wynn Resort combined. However, the company viewed the drop in share price as a buying opportunity since the directors had instituted a share-buyback program.

Las Vegas Sands

Las Vegas Sands Corp., which took the biggest hit in share price decline on Thursday, reported net profit of $109.3 million, or $0.31 per share, easily topping last year’s $0.24 per share on $86.4 million. However, the company said unlucky play at the tables at The Venetian lowered the bottom line by more than $5 million.

Helping the company show strong earnings was its operation in the Chinese enclave of Macau.

Excluding one-time losses, such as pre-opening expenses related to its musical production "Phantom" The Las Vegas Spectacular" in June, and the development of its new poker room, the company had adjusted net income of $121.3 million or $0.34 per share. Last year, the adjusted net income was $95.5 million or $0.27 per share.

Analysts had forecast adjusted net income of $0.34 per share but expected total revenue to hit more than $520 million, higher than the actual $517 million.

Net revenues at the Sands Macao casino rose to $310 million up from $205 million a year ago.

Wynn Resorts

Analysts had expected Wynn Resorts Ltd. (WYNN) to report a profit in the second quarter but despite the disappointment of a reported loss the company’s shares remained in the high $60 range.

The company reported a quarterly loss of $20.1 million or $0.20 per share compared with a loss of $41.8 million or $0.43 per share in 2005. Excluding property charges and other items, the company posted an adjusted net loss of $4.9 million or $0.05 per share.

However, revenues increased 36% to $273.4 million from last year’s $201.1 million.

Prior to the report, Wall Street was looking for revenues to reach $268.5 million with a profit of $0.05 per share.

Obviously investors were looking forward to Wynn Macau that is set to open next month. That will be followed by a grander development in late 2007.

Also, Wynn Resorts will have a companion in 2008, a $1.7 billion hotel/casino called Encore

Reporting season

Among other gaming companies that have reported quarterly results were:

Lakes Entertainment Inc. (LACO) whose interest in the World Poker Tour is offset by the company’s involvement with Indian casinos, moved to a profit in the second quarter, fueled by a 70% rise in sales.

For the three months that ended on Feb. 2, the company earned $3.2 million or $0.13 per share compared with a loss of $5.7 million or $0.25 per share a year ago. Revenue climbed 70% to $11.2 million, up from $6.6 million in 2005.

MTR Gaming Group Inc. (MTNG) that includes Binion’s Gambling Hall in downtown Las Vegas among its operations, saw both revenues and profits slip in the second quarter.

Profit fell to $472,000 or $0.02 per from last year’s $1.6 million or $0.06 per share. The company blamed a higher tax rate in West Virginia, where it operates Mountaineer Park and Gambling Casino, and the costs of expansions for its decline.