Fearful gambling investors closing their wallets

Nov 3, 2009 3:43 AM
Industry Insider by Ray Poirier |

As fear spread through the major trading floors last week, investors in gambling stocks showed that they aren’t willing to gamble.

Wynn Resorts Ltd. (WYNN) reported a profit for the third quarter that ended on Sept. 30, albeit a smaller profit than what was reported a year earlier, yet the company’s share price was pummeled, falling $7.50 in one day.

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WMS Industries (WMS), one of the industry’s largest makers of gaming machines, reported a profit that topped the comparable quarter of 2008 by seven cents, yet investors reacted negatively to the company’s share price.

Scientific Games Corp. (SGMS), the nation’s largest producer of lottery instant tickets, saw its share price drop more than 20 percent in just one day of trading after reporting earnings of $0.24 per share. This was down from last year’s $0.32 per share.

And Bally Technologies Inc. (BYI) reported its quarterly profit increased to $0.53 per share from last year’s $0.52 per share, yet its share price couldn’t stay above $40 where it had traded all week.

One of the few bright spots, although it reported a major loss for the third fiscal quarter, was Las Vegas Sands Corp. (LVS).

LVS posted a loss of $123 million or $0.19 per share compared to last year’s loss of $32.2 million or $0.09 per share. The company said the loss was exacerbated by increased income tax expense.

But, saving LVS investors was the announcement that the Hong Kong Stock Exchange had approved its initial public offering (IPO). And on Monday, documents surfaced indicating the company would seek $2.5 billion in its IPO.

The company said that its banking advisors – Goldman Sachs, Citigroup and UBS – would begin a "road show" on Nov. 9 to gauge interest in the IPO. The hope for the company is to begin trading on the Hong Kong exchange by the end of November.

Also feeling the wrath of investors last week was Boyd Gaming Corp. (BYD) that reported a drop in income for the third quarter from last year’s $0.10 per share to $0.07 per share.

During its presentation, Boyd announced that it would not do anything with its shell-construction of Echelon on the Las Vegas Strip for from three to five years. However, the company still hoped to use the funds to acquire some or all of the "locals" casinos operated by bankrupt Station Casinos Inc.

Although no longer publicly traded, Harrah’s Entertainment Inc. reported that its loss during the third quarter was $1.6 billion, which included a write-down of assets of $1.33 billion.

Question? Comment? E-mail me at: Ray Poirier