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Investors cheer Boyd's Echelon suspension

Aug 5, 2008 7:02 PM

Earnings by Ray Poirier | Multi-billion dollar property developments in Las Vegas have been a major concern for some investors in the past year which explains why they cheered Friday’s announcement by Boyd Gaming Corp. (BYD) that it was temporarily suspending construction of the $4.5 billion Echelon on the Las Vegas Strip.

In pre-opening trading, BYD shares zoomed up more than 30%, falling back some during the regular trading hours. After more than 11 million shares had changed hands on Friday, the shares closed at $12.01 each.

Also impressing investors were the additional announcements that the company directors had agreed to suspend future dividend payments and to authorize the purchase of an additional $100 million of company stock.

As for the fiscal report for the second quarter, the company said it had net revenues of $460.8 million compared to $511.4 million in the second quarter of 2007. Income from continuing operations was $21.7 million or $0.25 per share, down from last year’s $22.9 million or $0.26 per share.

For the six-month period that ended on June 30, the company reported a loss from continuing operations of $10.9 million or $0.12 per share, which included a pre-tax impairment charge of $84 million related to the write-off of the Dania Jai-Alai intangible license right.

By comparison, in 2007 the income from continuing operations was $58 million or $0.66 per share.

The company also noted that second quarter net revenues for its Las Vegas "locals" segment were $197.9 million, down from the previous year’s $211.1 million.

Addressing the current economic atmosphere, Paul Chakmak, executive vice president and chief operating officer, said, "Our veteran management team has been through difficult times before and is drawing on that experience to guide us through this challenging period. We continue to aggressively refine our operations, exploring new and innovative ways to run our businesses and control costs without compromising the integrity of our entertainment offering."

Las Vegas Sands

Macau worked for Steve Wynn and his Wynn Resort Ltd. (WYNN) but the Chinese enclave failed to keep Las Vegas Sands’ (LVS) head above water.

For the second quarter, the Sheldon Adelson majority-owned LVS reported a loss of $8.8 million or $0.02 per share compared with a profit of $34.4 million or $0.10 per share a year ago.

When special items are excluded, earnings totaled $30.9 million or $0.09 per share compared with $81.9 million or $0.23 per share in 2007.

Analysts had expected adjusted earnings of $0.12 per share.

Due primarily to increased competition, the company said, Macau income dropped more than 60% to $40.2 million in the second quarter. This was just the opposite of Macau revenues reported by WYNN just a week earlier that showed an increase of 60%.

Las Vegas Sands President and COO Bill Weidner said that both VIP and mass volumes in Macau had declined, year-over-year, but that the company was pleased with the property’s long-term outlook.

The company will open the Four Seasons Macao on the Cotai Strip on Aug. 28.

As for its Las Vegas properties, operating income fell 26.2% to $42.1 million. Also, the company noted that occupancy at the Venetian declined during the second quarter, reflecting the slowdown reported by other gaming companies.

But not all was bleak, according to Weidner. He reported that in the first 29 days of July, the occupancy rate at the Venetian had reached 91% while the new Palazzo’s occupancy rate was 95%.

Other reports

Scientific Games Corp. (SGMS) posted net income of $29 million or $0.31 per share for the second quarter that ended on June 30. This easily topped last year’s $27.1 million in income or $0.28 per share.

MTR Gaming Inc. (MNTG) said its second-quarter loss widened despite an 11% revenue boost resulting from the addition of table games at its Chester, West Virginia, racino. The company said its loss was $2.3 million or $0.08 per share compared to a loss in 2007 of $502,000 or $0.03 per share.

PokerTek Inc. (PTEK) reported it had reduced its quarterly loss to $1.95 million or $0.18 per share from last year’s loss of $2.81 million or 0.27 per share. Total revenue grew to $3.84 million from $915,696 in 2007.