Wynn Resorts outlook spooks investors

By Deena Beasley

LOS ANGELES (Reuters) - Casino operator Wynn Resorts Ltd (WYNN.O) posted better-than-expected quarterly earnings on Tuesday, but a downbeat outlook spooked investors and shares fell 10 percent.

On a conference call with analysts and investors, Wynn executives said bookings for Las Vegas conventions and meetings remain weak and and high-end domestic business is still missing-in-action.

Wynn, which earlier this month raised about $1.8 billion via a Hong Kong listing of shares in its Wynn Macau Ltd (1128.HK) unit, reported net income of $34.2 million, or 28 cents per diluted share, compared with $51.2 million, or 49 cents per share, a year earlier.

KeyBanc analyst Dennis Forst said the profit was inflated by above-average luck for Wynn at its Las Vegas gaming tables and a tax benefit of $10 million.

Adjusted for property charges and other items, the Las Vegas-based company posted a profit of 33 cents per share, which beat the average analyst estimate of 15 cents a share, according to Thomson Reuters I/B/E/S.

"The numbers clearly beat our expectations," said Susquehanna Financial analyst Robert LaFleur. "The results were fairly respectable given the difficult operating environment, but some investors may have expected more."

"The beat was encouraging, but EBITDA (earnings before interest, taxes, depreciation and amortization) was pretty much as expected," said Sanford Bernstein analyst Janet Brashear.

Wynn, run by casino mogul Steve Wynn, operates two casino-resorts in Las Vegas and one in Macau, the only place in China where gambling is legal. The company's second Macau resort, Encore Macau, is scheduled to open April 1.

"Macau EBITDA only exceeded expectations by 2 percent," Stifel Nicolaus analyst Steven Wieczynski said in a research note. "Shares are reacting negatively as we believe investors expected more upside out of Macau."

Chief Executive Wynn, speaking on the conference call, said the company is on track this year "to equal or beat" its 2008 results in both Macau and Las Vegas.

The company will grapple later this year with more competition on the Las Vegas Strip when MGM Mirage (MGM.N) opens its multi-tower CityCenter project in December.

"We are focusing on the fundamentals," Wynn said. "There is not a lot that we can do to overcome people's curiosity ... I hope that we live up to the challenge."

Wynn's quarterly net revenue inched up to $773.1 million from $769.2 million, aided by higher hotel and food revenue tied to Encore, Wynn's second Las Vegas resort that opened last December. Analysts had expected $743 million.

Goldman Sachs analyst Steven Kent said upside for Wynn's shares could remain limited near-term until investors gain clarity on Macau visa restrictions. Chinese officials have eased restrictions put in place last year, but there have been recent reports of a tightening for some mainland Chinese.

"We don't feel any uncertainty in Macau," Wynn said.