Macau license sale
helps Wynn’s 3Q

Nov 14, 2006 6:09 AM

Wynn Resorts Ltd. (WYNN) came out of the red during the past quarter thanks to Australian publishing magnate James Packer and his gaming partner Lawrence Ho who paid the company $900 million for a subconcession gaming license in Macau.

For the period that ended on Sept. 30, the company reported net income of $715.7 million or $6.43 per share compared with a year-ago loss of $9.2 million or $0.09 per share.

Net revenues during the period were $318.1 billion, a jump of 26.5% over last years. However, the current period included 25 days of operation of the company’s new casino in Macau, the Chinese enclave.

Without the subconcession payment, the company would have reported an adjusted net loss of $1.3 million or $0.01 per diluted share.

Including stock option expense, analysts had expected an adjusted profit of $0.06 per share on revenue of $301 million.

Still investors strongly supported the WYNN shares based on projections of increasing volumes from its Macau operations. During the first 25 days of operation, net revenue at that facility reached $45 million, thus producing earnings of $2.3 million before interest, taxes and other payments.

The company said construction on the second phase of Wynn Macau is continuing and will open in stages in 2007. The second phase will include more casino space, two restaurants, a theater and added retail space.

Macau enthusiasm pushed the share price of WYNN beyond $82 per share on Friday, a runup of nearly $7 per share in the week’s five days of trading.

Also benefiting from that Macau enthusiasm was Las Vegas Sands Corp. (LVS) whose shares went from a Monday opening of $73.10 per share to a Friday closing of $87.24 per share.

Packer said that his and Lawrence Ho’s Crown Macau will open in April, 2007, and that a mega-resort, called City of Dreams, has a target date of 2008.

IGT

International Game Technology (IGT), the world’s largest manufacturer of gaming devices, continued reporting strong product sales and increased revenues for the fourth quarter of fiscal year 2006 that ended on Sept. 30.

Net profits for the quarter reached $114.9 million or $0.33 per share, up from last year’s $105.4 million or $0.30 per share.

For the fiscal year, the company had revenues of $473.6 million or $1.34 per share, outdoing 2005’s revenues of $436.4 million and earnings of $1.20 per share.

The quarterly results topped Wall Street expectations by one penny.

President and CEO TJ Matthews called the period a "sluggish year" that the company was able to overcome with new and expanding domestic markets.

North American product sales rose 30%, he noted. He also cautioned that the first-quarter results are typically soft and estimated the next quarter’s earnings as between $0.33 and $0.37 per share.

Analysts, however, were more bullish, predicting earnings to be in the $0.36 to $0.41 per share range.

Landry’s Restaurants

Landry’s Restaurants Inc. (LNY), operator of the Golden Nugget Casino/Hotel in downtown Las Vegas, dumped many of its poorly-producing Joe’s Crab Shack restaurants, thus resulting in a losing quarter during the period that ended on Sept. 30.

Quarterly loss totaled about $30 million or $1.36 per share compared with a profit in 2005 of $16 million or $0.73 per share.

Last month, the company said it would sell its Joe’s Crab Shack chain of 120 restaurants for $190 million. This resulted in a charge of $1.51 per share from discontinuing operations.

The company said same-store sales, or sales in restaurants open at least one year rose 1% during the third quarter.

Tilman Fertitta, chairman and CEO, remained optimistic, however.

"The Golden Nugget renovations are substantially completed, and I am extremely pleased with the improvements. With the pending sale of Joe’s, we will sharpen our focus on our higher end restaurants," he said.

Churchill Downs

The sale of assets played a greater role in the quarterly results of Churchill Downs Inc. (CHDN), both in the most recent quarter and in its 2005 comparative period.

Income for the 2006 quarter that ended on Sept. 30, fell 88% to $8.8 million from last year’s $71.6 million or $5.30 per share.

The latest quarter included a gain of $4.2 million on the sale of assets, including Ellis Park racetrack while a year ago the results included $69.9 million gain.

Earnings from continuing operations fell 14% to $2.7 million or $0.20 per share, primarily because of poor results from Arlington Park, near Chicago, Ill., whose operation was badly impacted by horse injuries.

However, revenues rose 4.6% to $106.4 million from last year’s $101.7 million due to increased revenue from Louisiana slots operations and off-track betting activity.