Wynn Q1 disappoints; Macau casino a bright spot
SAN FRANCISCO/HONG KONG
SAN FRANCISCO/HONG KONG (Reuters) - Wynn Resorts (WYNN.O) posted quarterly results that lagged Wall Street targets after robust growth in Macau failed to make up for flagging Las Vegas revenue, underlining the incentive for CEO Steve Wynn to develop his business further in the bustling enclave off China's coast.
Macau, the world's largest gambling destination, has been a goldmine for U.S. operators, raking in six times what Vegas does as visitors from the mainland spend big at the slots and baccarat tables in the only Chinese city where casino-gambling is legal.
Wynn's company received formal approval last week to build a new Macao casino, and he told a conference call following the earnings results that it would take 3-1/2 years to complete, with the firm going "lickety-split" to get it done.
Wynn Resorts reported revenue of $1.31 billion in the first quarter of 2012, shy of analysts' forecasts for about $1.33 billion.
Vegas revenue slid 8.1 percent due to lower "hold," or money won from gamblers, the company said. Analysts said the quarter was essentially a slight miss with the month of March overall a weak month.
Revenue in Macau, however, jumped 9.8 percent.
Wynn's approval for his new Macau casino puts him ahead of rivals MGM China (2282.HK) and local player SJM (0880.HK), which are awaiting notice from the government. Las Vegas Sands (LVS.N) just opened another casino there in April.
Wynn said the new casino would not come cheap, though he declined to provide spending figures as the company is working out ways to reduce costs.
"We have to make this hotel on Cotai, in every sense of the word, irresistible to the guests. And that's an expensive assignment to undertake," he said, adding that the property would dramatically increase non-casino revenue with its 2,000 suites and exhibition space.
PROSECUTE WITH 'GUSTO'
Addressing his ongoing legal battle with former shareholder Kazuo Okada, a Japanese billionaire who helped bankroll his casino developments starting in 2000, Wynn said the company would continue to respond to lawsuits filed against his firm.
"We will prosecute the case here in Nevada for breach of fiduciary duty and conflict of interest with great gusto, armed with a number of facts that are documented and irrefutable. Mr. Okada will have to deal with that in due course," he said.
On expansion plans, Wynn described the company as a jumping teenager and able to handle developing two casinos at one time. Wynn missed out developing in Singapore a few years earlier, where Las Vegas Sands rival Sheldon Adelson has one of the world's most profitable casinos, the Marina Bay Sands.
Net income was $140.6 million or $1.23 per share, down from $173.8 million or $1.39 per share a year earlier.
Excluding certain items, earnings per share in the quarter were $1.33, falling short of the $1.41 expected on average, according to Thomson Reuters I/B/E/S.
Shares of Wynn slipped 1.2 percent to $123.60 in after-hours trade from a close of $125.19 on the Nasdaq. Wynn Macau (1128.HK) shares were trading down 0.7 percent at 11:15 p.m. EDT (0315 GMT).
(Editing by Chris Gallagher)