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Arnold M. Knightly

Las Vegas Sands fires top Macau exec

26 July 2010

LAS VEGAS, Nevada -- Las Vegas Sands has fired its top executive in Macau.

Sands China Chief Executive Officer and President Steven Jacobs was removed from his position, Las Vegas Sands said Friday in a filing with the Securities and Exchange Commission.

Jacobs, who made a base salary of $1.3 million, was also removed as director of the subsidiary.

Las Vegas Sands Chief Operating Officer and President Michael Leven was named acting CEO and will work with Sands China's directors to find a permanent replacement for Jacobs.

Steve Weaver, former Las Vegas Sands president of Asian development, will serve as an adviser to Leven.

Las Vegas Sands did not give a reason for Jacobs' termination, though his departure should not come as a surprise to investors. There has been speculation in the Macau press about disagreements between Jacobs and Las Vegas Sands Chairman and CEO Sheldon Adelson, J.P. Morgan gaming analyst Joseph Greff said in a note to investors.

The relationship between Jacobs and Adelson became tense over the past few months as Jacobs pushed for authority to operate Sands China without the parent company's involvement in day-to-day operations, according to the Wall Street Journal.

After Jacobs recently commented that Japan's first casino should open in 2014 or 2015, Adelson said he agreed with Jacobs' prediction, but noted that he is in charge of development, The Wall Street Journal said.

Jacobs joined Las Vegas Sands in March 2009 and was named Sands China CEO in August. He helped guide the subsidiary's $2.5 billion public offering on the Hong Kong stock exchange in November.

The subsidiary owns and operates the Sands Macau, The Venetian Macau and the Plaza Casino at Four Seasons Macau.

The region accounted for 82.6 percent of Las Vegas Sands' $3.5 billion in 2009 casino revenues and 75.3 percent of its $1.12 billion in cash flow last year.

Cash flow is defined as earnings before interest, taxes, depreciation, amortization and rent.

The company's strong performance in Macau continued in the first quarter. Net revenue jumped 26.5 percent to $283.8 million and cash flow rose 38.5 percent to $69.8 million at the Sands Macau. The Venetian Macau saw revenue increase 13.6 percent to $549.7 million and cash flow increase 39.8 percent to $169.9 million. At the smaller Four Seasons Macau, revenues jumped 117.7 percent to $102.3 million and cash flow climbed 343.2 percent to $19.5 million.

While Jacobs' dismissal might not be a surprise to investors, Greff said the company's stock will likely take a hit.

"We think the stock will likely pull back on perceived continued management strife and the fact that most investors believe that Steve was doing a solid job in managing costs, growing mass and direct VIP share, and working on the redevelopment of sites 5 and 6," Greff said in the note.

Sands is preparing to restart construction on two projects in Macau, known as sites 5 and 6, which are scheduled to open in 2011.

Adelson said in a statement the "change to the management team would have no material impact on the company's operations in Macau or its ability to complete the Sheraton/Shangri-La/Traders, parcels 5 and 6, development currently under construction there."

Las Vegas Sands stock closed Friday at $25.54 per share on the New York Stock Exchange, up 47 cents, or 1.87 percent.