Wynn Wins With Macau, by Miriam Marcus - Forbes - 30th October 2008

Soft revenues at Wynn Resorts' Las Vegas casino are being offset by improved results at its Macau property.

Wynn Resorts announced a 14.3% increase in third-quarter earnings after the closing bell Thursday, and the casino operator's shares logged a second consecutive day of double-digit gains.

With Americans tightening their spending amid the economic slowdown, U.S. casinos aren't packing in the crowds of a few years ago. Earlier this month, Wynn warned of a profit shortfall at its Las Vegas casino. However, increased business at its casino in the Chinese gambling enclave of Macau allowed the Las Vegas-based company to post a quarterly earnings rise.

"China is pretty stable for us. Las Vegas ... is a little murky," said billionaire casino mogul Stephen A. Wynn, the company's chief executive officer, adding that the biggest area of softness is midweek business in Las Vegas.

Wynn's net revenue rose 17.7% to $769.2 million, from $653.4 million, in the recent quarter, led by an overall casino revenue jump of 23.9% while room revenue dropped 2.5%. Earnings jumped to $51.1 million, or 49 cents per share, compared with $44.7 million, or 41 cents per share, in the year-earlier quarter.

Wynn is preparing to open its newest casino resort, the 2,000-room Encore Las Vegas, on Dec. 22. It expects the smaller Encore Macau to be finished by the first quarter of 2010. (See: " Wynn Resort Plan Not Yet A Winner In Macau.")

Wynn shares gained 13.3%, or $5.45, to close at $46.50 on Thursday, following a jump in gaming stocks the day before, as investors who had been betting against the gaming industry apparently decided to close out their positions and book gains. (See: " Shifting Sands.") A short squeeze on Las Vegas Sands sent its shares soaring and rival MGM Mirage rose on its plans to issue secured debt, despite its poor earnings results.

Shares in Las Vegas Sands jumped 16.5%, or $1.47, to $10.38 on Thursday while MGM Mirage shares gained 11.8%, or $1.62, to $15.37.

Market Vectors Gaming, an exchange-traded fund that tracks the casino industry, rose 9.1%, or $1.52, to $18.22, on Thursday. The ETF traded as high as $45 early this year, shortly after it was introduced.

(Credit: Forbes)

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