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Howard Stutz

Sands Benefits From Macau

4 May 2005

Las Vegas Sands Corp. said Tuesday its first-quarter revenues jumped nearly 69 percent from a year earlier helped by strong revenue growth at its Sands Macau property.

However, the parent company of The Venetian said its net income fell almost 86 percent as profits were eaten up by a loss of revenues after the sale of the Grand Canal Shoppes, development expenses, early debt retirement and an "unusually large" charitable contribution of $5 million to the Guggenheim Museum.

Las Vegas Sands said its diluted income per share was 2 cents, down from 15 cents per share a year ago. When adjusting for the losses from the various items, Las Vegas Sands said the company earned 29 cents a share, ahead of the 25-cent per share average estimate of analysts polled by Thomson First Call.

Revenues for Las Vegas Sands were $403.8 million, up from $239.2 million last year. Revenue from The Venetian was $209.9 million for the quarter, compared with $209.3 million last year. The Sands Macau contributed $175 million in revenue. The casino wasn't open a year ago.

Net income for the quarter was $7.1 million, down from $49.9 million in the first quarter of 2004.

Still, Las Vegas Sands executives were upbeat looking forward as property enhancements to both The Venetian and Sands Macau are expected to drive additional customers to the casinos' abundant gaming tables.

"Macau is a strong market, and we've ramped up an aggressive marketing campaign that will be launched this summer to attract new customers," Las Vegas Sands President and Chief Operating Officer Bill Weidner said in a conference call with gaming analysts and investors.

Weidner said several Asian communities have reduced travel restrictions to Macau, which is on the South China Sea, giving the Sands Macau an additional pool of new customers.

He said the opening of the Paiza Club in both the company's Las Vegas and Macau properties, which offers exclusive luxury suites on The Venetian's 36th floor and private gaming salons with large betting limits, gives the company a cross-marketing tool between the two casinos.

"There continues to be a strong demand for Las Vegas," Weidner said. "At The Venetian, we completed the renovation of our high-end suite offerings, which provided immediate benefits after their opening in February."

Investors were somewhat ambivalent about the company's quarterly results as shares in Las Vegas Sands traded down Tuesday. The company's stock price closed at $36.10, down $2.20, or 5.74 percent. Since hitting a 52-week high of $53.98 on Dec. 20, the price has fallen almost 33 percent.

More than 2.8 million shares were traded Tuesday, more than double the average daily volume.

The Venetian reported pretax earnings of $90.5 million, down from $97.8 million a year ago and due to a lower year-over year table game hold percentage. Still, the amount wagered at the Strip resort's gaming tables during the quarter was $309.1 million, a 19.1 percent increase from a year ago.

Average daily room rates and revenue per-available-room were both up, but occupancy levels were down slightly.

"The Venetian's first-quarter results support the well-known strength of fundamentals in Las Vegas, as highlighted by earnings reports of other operators," said Deutsche Bank gaming analyst Marc Falcone. "Casino volumes were strong, and casino win was flat."

With a hotel tower expansion completed at The Venetian last year, the company is focusing on both Las Vegas and Macau for growth. Construction is under way for the Palazzo, a $1.6 billion, 3,025-room resort next to The Venetian projected to open in 2007.

"Overall, the quarter was mixed, with weaker-than-expected performance in Macau offsetting very solid Las Vegas results," said gaming analyst Steven Kent of Goldman Sachs. "The Venetian in Las Vegas displayed the strength we have been seeing across Las Vegas."