Wynn: Macau up, but Strip weak
Wynn Resorts Ltd. told investors Monday it expects to see a decline in operations from its Strip casino during the third quarter. However, the downturn is expected to be offset by improved results at the company’s casino in Macau.
Las Vegas-based Wynn preannounced earnings for the second straight quarter, mainly to give investors some insight into the casino company’s operations during the ongoing financial crisis. Wynn will release its official third-quarter numbers on Oct. 30.
After the stock markets closed Monday, Wynn said operating results from Wynn Las Vegas would range from a $2 million loss to a $2 million gain during the quarter ended Sept. 30. A year ago, Wynn Las Vegas reported operating income of $35.8 million.
The company expects Wynn Macau to report operating income of $57 million to $63 million, compared with operating income of $39.2 million in the same quarter of 2007. In a statement, the company said recent travel restrictions imposed by the Chinese government on visitation from mainland China to Macau did not affect its operations at Wynn Macau.
The company said cash flow at both its Las Vegas and Macau properties had been affected by an increase in bad debt reserves based solely on the current global economic uncertainty.
Wynn shares, traded on the Nasdaq National Market, have been subject to frequent price swings along with the rest of gaming sector. Wynn shares, which traded at an all-time high of $176.14 on Oct. 29, closed Monday at $63.37, up $3.89, or 6.54 percent. In after-hours trading, Wynn shares fell about $3.12, or 4.92 percent to $60.25 at 7 p.m. PDT.
Last week’s stock market battering flipped the market capitalization rankings (number of shares outstanding multiplied by the current price per share) of the top publicly traded casino operators. Wynn Resorts had a market capitalization of $6.57 billion on Monday. The market capitalization of Las Vegas Sands Corp. was $5.38 billion, while MGM Mirage was $4.84 billion. The market capitalizations of all three companies have fallen significantly in recent weeks as share prices have fallen.
Before the markets opened Monday, JP Morgan gaming analyst Joe Greff reduced his estimates for the major casino operators, including Wynn.
Greff said Wynn was still well positioned because of a solid balance sheet, assets and project funding. However, the planned opening of the company’s $2.2 billion Encore in Las Vegas in December may be making investors nervous given the current economic conditions. In its statement, the company said Encore is fully financed and should open on time and within its previously announced budget.
Greff thought the company, which is expanding Wynn Macau, would slow future developments in China.
“Our view (is) that Wynn’s management will prudently take time to design and develop its Cotai opportunity,” Greff said.
Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871.