July 29, 2010 / 11:22 PM / 9 years ago

Wynn Q2 profit doubles as shares decline

LOS ANGELES (Reuters) - Casino operator Wynn Resorts Ltd’s (WYNN.O) quarterly profit more than doubled as revenue in Macau rose 74 percent, but much of the beat came from a spike in casino winnings, and shares fell more than 3 percent.

Gambling revenue has soared so far this year in Macau, the only place in China where gambling is legal, while the Las Vegas Strip continues to grapple with a glut of new hotel rooms and casinos. Wynn warned last week that its Las Vegas results fell short in the second quarter.

“The numbers were spectacular in Macau and people expected them to be spectacular,” said Union Gaming analyst Bill Lerner. “If you adjust for better hold — better luck at Wynn in Macau — the numbers were in line or close to it.”

Quarterly VIP table game volume at Wynn’s Macau properties rose 72 percent year-over-year to $21.7 billion, of which the casino won 3.2 percent — which was higher than the normal range of 2.7 percent to 3 percent.

“They beat ... it looks like they played pretty lucky in Macau,” said Hudson Securities analyst Robert LaFleur.

The company, which also operates two casino-resorts in Macau and two in Las Vegas, reported a net profit of $52.4 million, or 42 cents per share, compared with $25.5 million, or 21 cents per share, a year earlier.

Adjusted for one-time items, Wynn earned 52 cents per share, which beat analysts’ estimates, including the Thomson Reuters StarMine SmartEstimate of 45 cents a share. SmartEstimates give more weighting to analysts with a history of accuracy.

Net revenue rose 43 percent to $1 billion, in line with the average SmartEstimate.

Wynn’s revenue in Las Vegas rose just 1.7 percent, while adjusted property earnings fell 14 percent due to higher costs.

Property earnings in Macau rose 84 percent.

Chief Executive Steve Wynn, speaking on a conference call, said the company is planning a third Macau resort and is revamping its namesake Wynn Las Vegas property to attract higher-paying corporate customers.

The company expressed “cautious optimism” about a recovery in Las Vegas, but noted that it has yet to see a rebound in visitor spending.

“The market these days is not willing to pay for any confidence in Vegas,” Lerner said.

Shares of Wynn fell 3.3 percent, or $2.95, to $84.90 after closing at $87.85 on Nasdaq.

Reporting by Deena Beasley; Editing by Steve Orlofsky, Gary Hill and Carol Bishopric

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