Sands profits slip away


Declining revenues in Macau and one-time charges sent Las Vegas Sands Corp. to a net loss of $111.3 million in the fourth quarter, the company said Wednesday.

The casino operator said its overall company revenues were up 4.3 percent because of increases in business at The Venetian and Palazzo on the Strip. However, the $1.8 billion Palazzo was being built for most of the three-month period a year ago and did not open until just before New Year's Eve.

The company's net loss of 27 cents per share for the quarter that ended Dec. 31 compared with a net income of $39.9 million, or 11 cents per share, in the same quarter a year ago. Analysts polled by FactSet research estimated the company would earn 4 cents a share.

Las Vegas Sands' quarterly revenues rose 3.8 percent to $1.09 billion from $1.05 billion.

The quarterly earnings marked the company's first financial report since its $2.1 billion capitalization effort in November that kept the company out of bankruptcy. The move, however, reduced the majority holdings of Las Vegas Sands Chairman and Chief Executive Officer Sheldon Adelson to 51.3 percent. The company also stopped construction of a $600 million high-rise condominium project on the Strip and several sites on the Cotai Strip of Macau.

Las Vegas Sands President Bill Weidner said the company has planned cost-saving initiatives that will save $250 million annually.

"Our fourth-quarter results reflect a respectable operating performance against our first objective (execution of the company's business plan), as our properties in Las Vegas and Macau delivered solid cash flows in the face of challenging economic environments in both markets," Weidner said in a statement.

In Las Vegas, the company's two Strip resorts saw net revenues increase 26.5 percent to $327 million. Wagering on table games increased 37 percent, while slot play grew 33.3 percent.

"Our efforts to control costs and generate efficiencies across our integrated resort complex expanded throughout the fourth quarter," Weidner said.

In Macau, net revenues at the Venetian Macau fell almost 6 percent to $471.4 million while net revenues fell 14.3 percent at the Sands Macau to $247.2 million.

Macau visitation has been hurt by visa restrictions implemented last year by the Chinese government and designed to cut down the number of trips into Macau by residents of mainland China. Macau is the only place in China where gambling is legal.

"Although the results of the Sands Macau clearly reflect the competitive environment for gaming customers on the Macau Peninsula, our gaming volumes have remained healthy and reflect the unique market positioning of the Sands Macau on the Macau Peninsula," the company said in a statement.

The day before Las Vegas Sands announced earnings, Susquehanna Financial Group gaming analyst Robert LaFleur reiterated his neutral rating on the company's shares. He said a successful opening of the $4 billion Marina Bay Sands in Singapore could help reverse the company's fortunes. The property is scheduled to open either late this year or in early 2010.

He said the company's problems in Macau shouldn't be repeated in Singapore because Las Vegas Sands will have a virtual monopoly on gaming in the island-nation for a short period of time.

"Singapore's opening this year could be Las Vegas Sands' salvation from its current troubles," LaFleur told investors. "Singapore appears to be a very attractive gaming market, and the duopoly there is not likely to create the same competitive problems that plague Macau. If Singapore works the way Las Vegas Sands thinks it can ... some of Las Vegas Sands problems could ease."

Shares of Las Vegas Sands rose 23 cents, or 6.13 percent, to close at $3.98 on the New York Stock Exchange in anticipation of earnings, which were announced after the markets closed.

Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871.

 

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