Wynn Resorts first quarter profit falls 20 percent

Billionaire Steve Wynn, chairman and CEO of the Las Vegas-based gambling resort company, told investors during a conference call that his company would weather the current economic slowdown. "This is about the sixth time I've been through slowdowns in Las Vegas in my 40-year career," Wynn said. "This is not a company that gives a damn about short-term markets," he added.

The company said it earned us$ 46.7 million, compared with us$ 58.4 million, in the year-ago period. The company said operating costs rose 30 percent to us$ 688.1 million.Excluding items such as losses on interest expenses and other financing, adjusted net income totaled us$ 78.2 million for the period ended March 31. That was up from us$ 72.6 million a year earlier. Sales were up 22.6 percent, to us$ 778.7 million, from us$ 635.3 million in the same period in 2007.

The results were slightly below analysts' expectations of earnings on sales of us$ 734.4 million. The conference call came after Wynn shares closed at us$ 108.19, up us$ 2.85. The stock price fell us$ 3.49 to us$ 104.70 in after-hours trading.

Wynn focused on gross non-casino revenue, which the company reported was us$ 201.6 million for the quarter at the Wynn Las Vegas resort, up 3.3 percent from the first quarter of 2007 and driven primarily by higher entertainment revenue. Hotel revenue was down 3.3 percent, to us$ 70.6 million during the quarter. "Non-casino revenue is not down, it is even or up slightly," Wynn said.

The company said its overall revenue increase was primarily driven by sales at its Wynn Macau property, where the company opened an expansion in December. The company said the Macau property generated net revenue of us$ 491.5 million, up 61 percent compared with us$ 304.6 million for the first quarter of 2007.

"The numbers out of Macau were pretty fantastic," said Robert LaFleur, an analyst with Susquehanna Financial Group who said he thought Wynn benefited from a high-end position in the market. "Las Vegas was tougher," LaFleur said.

Wynn pointed to figures showing slot machine revenue dropped in Las Vegas from us$ 60.4 million to us$ 52.7 million. He called the decline most pronounced in quarter-play machines. "That is exactly the narrative," LaFleur said, "which is that the downturn in Vegas is much more concentrated in the middle and low end of the market."

Deutsche Bank analyst Bill Lerner said Wynn business in Las Vegas was down "relatively modestly," and losses were compounded by poor luck in a typically lucky three-month period that draws baccarat players during Chinese New Year.

Wynn reported a lower table hold percentage for the quarter, at 19.9 percent in 2008, compared with 27.6 percent in 2007. "That shows that they won less than they normally would in a first quarter," Lerner said.

Wynn plans a Macau expansion, with the opening of the us$ 600 million, 405-room Wynn Diamond Suites resort in 2010. The company also is awaiting approval from the Macau government to develop a 52-acre site.

Wynn said internal hiring has begun and room reservations will begin June 15 for the us$ 2.1 billion Encore tower adjacent to the Wynn Las Vegas on the Las Vegas Strip. He said he expected the new resort will open by Christmas, no matter what the economy. "If the market is soft in December, I don't care," he declared.