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Best of Howard Stutz

Gaming Guru

Howard Stutz
 

LV Sands giddy about prospect for Macau

2 August 2007

LAS VEGAS, Nevada -- Despite a second quarter where robust revenue didn't translate into increased earnings, Las Vegas Sands Corp. executives were jubilant Wednesday.

Four weeks before opening the $2.4 billion Venetian Macau, company executives said the resort was ready for its unveiling after more than five years of planning, construction and preparation. The massive 3,000-room resort, the first facility to open on the Cotai Strip, opens Aug. 28 with a 550,000-square-foot casino, 1.2 million square feet of meeting space and 1 million square feet of retail with 350 stores.

"We are now approaching a signal moment in the history of both our company and Macau," Las Vegas Sands President Bill Weidner said. "This is a dramatic complex. (It's) the beginning of a new era in the long and vibrant history of Macau. Macau will begin in earnest to realize her true potential as a world-class business and leisure destination."

Discussion of the prospects for Venetian Macau and its impact on the Chinese gaming market overshadowed the company's earnings for the quarter that ended June 30. Most of the questions from analysts during Las Vegas Sands' conference call concerned Macau.

Weidner said the Venetian hosted England's Manchester United soccer club when it played an exhibition in Macau last month. The soccer team, including its stars, Cristiano Ronaldo and Wayne Rooney, gave noncasino employees at the Venetian Macau a much needed run-through in the operations of the resort. The Venetian Macau was the sponsor of the soccer exhibition.

"On the day we open, in the 5,000-year history of Asia, it will be a historic event," Weidner said. "This is by far, the biggest building and the biggest hotel in Asia."

Only one month of results from Venetian Macau will be reflected in Las Vegas Sands third quarter.

For the second quarter, Las Vegas Sands said its net income was $34.4 million, which translated into 10 cents per share, compared to $109.3 million, or 31 cents per share, in the second quarter of 2006. Analysts polled by Thomson Financial expected the company to earn 26 cents per share.

The decrease in net income of $74.9 million was due to pretax increases of $36 million in pre-opening expense, $24.4 million in net interest expense, and $11.3 million in depreciation and amortization, as well as the loss realized on the early retirement of debt of $10.7 million.

Without the adjustments, Las Vegas Sands would have reported net income of $81.9 million, or earnings per share of 23 cents.

During the quarter, Las Vegas Sands had net revenues of $612.9 million, an 18.6 percent increase compared with $517 million a year ago.

"The second quarter of 2007 was another quarter of strong execution for our company," Weidner said. "We again delivered robust operating results at both our Las Vegas and Macau properties and continued to make steady progress in the execution of our development plans around the globe."

In Las Vegas, the company's casino revenues at The Venetian were $85.4 million, a 19.8 percent increase from $71.3 million for the same quarter a year ago. Hotel revenues were $93.3 million, a 6 percent increase compared with $88 million a year ago.

At the Sands Macau, casino revenues were $373.5 million, a 21.6 percent increase from $307.1 million the 2006 second quarter.

During the conference call, Sands leaders brushed off concern over recent actions by the Chinese government that has increased visa restrictions for travel by mainland China residents to Macau.

Executives related that government officials told the company the visa restrictions are meant to cut down on day-trip visitors, which would help ease crowding and make room for convention visitors and others who will stay in Macau on a longer basis.

Las Vegas Sands officials believe overall visitation to Macau will surge when the Venetian opens.

Shares of Las Vegas Sands closed at $85.68 on the New York Stock Exchange, down $1.57, or 1.8 percent.

Las Vegas Sands is also constructing the $3.6 billion Marina Bay Sands in Singapore with more than 1,100 workers participating in the project. The 2,500-room hotel-casino is expected to open in 2009.

The company is also building the $637 million Sands Bethworks at the site of the former Bethlehem Steel plant in eastern Pennsylvania. Construction crews have done preservation and refurbishment work on portions of the plant that will be part of the casino and entertainment complex.