Melco Q4 numbers fail to impress Wall Street

Apr 1, 2008 7:00 PM

Earnings by Ray Poirier | Macau watchers were not overly enthusiastic upon hearing on Monday the quarterly financial results reported by Melco PBL Entertainment Ltd. (MPEL).

For the quarter that ended on Dec. 31, 2007, the company, formed by the partnership of Lawrence Ho, son of Macau gaming guru Stanley Ho, and James Packer, son of legendary gambling whale Kerry Packer, showed a loss of $36.5 million or $0.29 per share compared to last year’s loss of $53 million or $0.52 per share.

Traders on Monday pushed the share price of MPEL down to $11.38, or $0.47 per share lower than when the market closed on Friday.

In addressing the quarterly report, Lawrence Ho, CEO and co-chairman, expressed optimism over the "good progress" shown during the period.

"Crown Macau delivered sequential hold-adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) growth in every month of the third and fourth quarters of 2007, and this trend has continued into the first quarter of 2008," he said.

"It is gratifying to see Crown Macau on the path to reaching its full potential," he added.

The company operates one of six gaming licenses on the island that approved expanded gaming after the government of Portugal returned the enclave to China. Previously, the only licensee was Stanley Ho, who still operates some 18 gambling properties.

After forming their partnership, Ho and Packer bought a sub-concession of the gambling license issued to Wynn Resorts Ltd.

Late 2007, MPEL decided to reconfigure their Crown Macau casino to focus more on the VIP trade and negotiated a contract with a company whose specialty is guiding high-rollers to the property. The company now relies heavily on junkets by big spenders.

As for the company’s future, Ho said he was "particularly excited about recent progress at City of Dreams," currently under construction on the Cotai Strip of Macau, expected to be the next major casino complex development in Macau.