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Wynn profit jumps on gain, but lags analysts' view
Tue Nov 7, 2006 8:23 PM ET
NEW YORK (Reuters) - Casino operator Wynn Resorts Ltd. <WYNN.O> said on Tuesday its quarterly profit jumped due to the sale of rights to build a casino in the Chinese gambling enclave of Macau, but it missed Wall Street's estimates.
The company, which opened a casino itself in Macau in September, said results from the new property were improving, but Chief Executive and founder Steve Wynn warned it was too early to predict how the casino would fare.
The company reported a net profit of $715.7 million, or $6.43 a share, compared with a loss of $9.2 million, or 9 cents a share, a year earlier.
Net profit in the quarter was boosted by the closing of the sale in September of rights to open a Macau casino to Australia's Publishing & Broadcasting Ltd. for $900 million.
Excluding that gain and some other special items, Wynn posted an adjusted loss of 1 cent per share. Wall Street expected 6 cents per share profit, on average, according to Reuters Estimates.
"It's a lot of below the line stuff," said Joseph Fath, a portfolio manager at T. Rowe Price Associates, which owns Wynn shares, explaining the difference between Wynn's results and Wall Street's forecasts. "It's meaningless in this company because it is a development-stage enterprise."
Wynn Resorts, created by casino mogul Wynn, opened its first casino in April 2005, the $2.7 billion Wynn Las Vegas, which set a new standard for luxury hotels in the U.S. gambling capital. It opened its second casino in Macau in September, which is finally expected to cost about $1.2 billion.
The company is expanding its Macau casino as well as building a $1.74 billion, 2,042-room casino-resort, called Encore, next to its Las Vegas property.
Wynn, who has shown an interest in the Atlantic City, New Jersey market, declined to give details of his plans for the oceanside resort.
"The potential exists for Atlantic City to become fashionable and exciting," Wynn said. "I think that market can be broadened."
Wynn Resorts said net revenue during the quarter rose 26.5 percent to $318.1 million. Analysts polled by Reuters Estimates expected it to post sales of $303.9 million.
Net casino revenue at Wynn Las Vegas increased to $131.9 million from $123 million. Table win percentage -- the amount of money won from gamblers -- was 22.3 percent, slightly above the expected range of 19 percent to 22 percent.
At Wynn Macau, the company posted net sales of $45 million in the first 25 days of operation.
Earnings before interest, taxes, depreciation and amortization at its Macau casino rose to $19.5 million in October after posting $2.3 million in the first 25 days of operations.
"It is too soon for us," Wynn said on a conference call, on the subject of the company's operations in Macau. "We really are finding our way in the dark here."
Wynn said the table win percentage from the mass market in Macau was 15.7 percent, below the expected range of 17 percent to 19 percent.
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