UPDATE: Wynn 2Q Net Down 91% But Beats View, Stock Rallies
July 30 2009 - 10:04AM
Dow Jones News
Wynn Resorts Ltd. (WYNN) posted a surprise second-quarter profit
as the casino operator effectively controlled costs amid a
challenging industry environment.
The positive results boosted the company's share price 14% to
$50.50 in recent trading Thursday. The stock has more than tripled
from a six-year low in March but is still down nearly two-thirds
from last August.
"Their margins at the casinos were (much) better than expected,"
said Dennis Forst, an analyst at KeyBanc Capital Markets, noting
the quarterly revenue numbers also came in better than he
expected.
However, Forst said he didn't think Wynn would prove to be a
barometer for the other major casinos like Las Vegas Sands Corp.
(LVS) and MGM Mirage (MGM) given the company outperformed mostly on
controlling costs rather than an improvement in the gaming
industry.
Nonetheless, in the wake of Wynn's results, Las Vegas Sands,
which reports later Thursday traded up about 10% in recent trading
to $11.26. MGM Mirage, reporting quarterly results next week, rose
8.26% to $7.47.
Casinos, especially those in tourist destinations such as Las
Vegas and Atlantic City, continue to suffer from a sharp drop in
revenue and visitors, but plans by Wynn and Las Vegas Sands to take
their Macau assets public reflect a revival of optimism about the
Chinese gambling enclave's prospects.
Wynn, which has a stronger balance sheet than most of its
rivals, reported a profit of $25.5 million, or 21 cents a share,
compared with earnings of $272 million, or $2.42 a share, a year
earlier. Excluding items such as a foreign-tax credit and
debt-extinguishment gains, earnings fell to 9 cents from $1.11.
Net revenue dropped 12% to $723.3 million.
Analysts' estimates were for a 1-cent loss on revenue of $739.3
million, according to a poll by Thomson Reuters.
Overall casino revenue slid 18%, and food and beverage revenue
climbed 15%, while other revenue fell 4.8%.
In Las Vegas, casino revenue climbed 3% on Wynn's new Encore
resort, which opened in Decmeber, also helped to push hotel revenue
up 13%.
Meanwhile, Wynn had a 23% revenue drop at its Macau operations,
which was hurt by a 24% slump in table-game winnings.
-By A.D. Pruitt, Dow Jones Newswires, 212-416-2197,
angela.pruitt@dowjones.com
(John Kell and Kathy Shwiff contributed to this report)