Majestic Research

Reuters

Wynn Resorts 3rd-Quarter Net Profit Fall

By Lisa Baertlein
Published: October 30, 2007

Wynn Resorts Ltd. posted a lower quarterly net profit and weaker Las Vegas slot machine results on Tuesday and its shares fell 5 percent.

The company created by casino mogul Steve Wynn reported third-quarter net income of $44.7 million, or 41 cents per share, compared with $715.7 million, or $6.43 per share, a year ago when the sale of subconcession rights in Macau, China’s gambling haven, boosted results.

Excluding the year-ago gain and other items, the company earned 67 cents per share, topping analysts’ average call for earnings of 63 cents, according to Reuters Estimates.

Wynn said net revenues more than doubled to $653.4 million from $318.1 million, driven by the Wynn Macau and Wynn Las Vegas.

Third quarter casino revenue was $149.9 million, up 14 percent, as the company’s table game win rate improved from the year ago quarter.

At the same time, Wynn’s slot machine win per unit per day fell 5.6 percent to $234 in the quarter.

The casino operator said slot volume declined 4.7 percent at Wynn Las Vegas. That result suggested softness in Wynn’s business that appeals to mainstream gamblers and landed as a weakening U.S. housing market has investors worried about the strength of consumer spending.

Wynn rival MGM Mirage, which plans to open its own Macau casino by the year-end, said on Tuesday morning that business at its lower-end Las Vegas properties was holding up.

“Based on what we’ve seen so far, concerns (about a mass-market Las Vegas downturn) could be overblown,” said Matt Jacob, Majestic Research.

Wynn’s niche customer is the high-rolling gambler, who favors table games.

Chief Executive Steve Wynn, who recently saw rival Las Vegas Sands Corp open the world’s biggest casino in Macau, said, “our VIP business jumped and it’s jumping at the moment.”

The company’s results suggested that Wynn’s high-end business in China had a blockbuster quarter.

“They really blew it out. This was a good quarter for them,” said Vance Wells, executive vice president at China Primary Research, which tracks Macau’s casino business.

Following the company’s financial report, Wynn shares fell to roughly $160 from their New York Stock Exchange close of $167.90.

Wynn shares were up nearly 80 percent so far this year, compared with MGM’s gain of 60 percent and Las Vegas Sands’ rise of almost 55 percent.