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Shares of gaming companies dive in July

2 August 2010

LAS VEGAS, Nevada -- The gaming industry might want to forget about July.

The average daily stock prices of casino operators and slot machine manufacturers all tumbled during the month with seven of the 10 companies followed by Las Vegas-based financial consultant Applied Analysis showing double-digit declines.

Las Vegas Sands Corp. and Wynn Resorts Ltd., which have the largest casino holdings in Macau of any American company, said their second-quarter earnings were helped by that market.

Apparently, the results from Macau also played a role in lessening the declines suffered by the companies' stocks.

Applied Analysis' monthly gaming index fell 1.2 percent to 331.23. The index reflects the composite score of daily stock prices, which mitigates some day-to-day volatility.

"Relatively strong earnings from nondomestic operations, particularly Macau, China, were not enough to push the overall index value forward." Applied Analysis partner Brian Gordon told clients in a report.

Shares of Las Vegas Sands traded down an average of 3.8 percent during July compared to a month earlier. Wynn Resorts was down less than 1 percent. Penn National Gaming, a regional casino operator which doesn't own a resort in Las Vegas or Atlantic City, was the only company whose average daily stock price had a single-digit decline.

The largest drop belonged to Boyd Gaming Corp., whose average daily stock price was down more than 22 percent.

The three major slot machine manufacturers, International Game Technology, Bally Technologies and WMS Industries, all saw their average daily stock prices fall between 10.5 percent and 14 percent.

Slot machine companies have suffered because casinos have been shying away from purchasing new gaming equipment.

On Friday, slot machine makers received some positive news when Massachusetts lawmakers seemed to near a compromise on allowing gaming opportunities in the state.

"We think this news is a welcome relief for the recently beaten down (and) possibly out of favor gaming equipment space," JP Morgan gaming analyst Joe Greff told investors. "Investors who wade into (IGT, Bally and WMS) and patiently hold them for the long term could potentially be rewarded in terms of share-price appreciation when U.S. replacements pick up and expansion opportunities become more tangible."

Most of the major gaming companies have reported earnings for the quarter. However, MGM Resorts International and Boyd Gaming will report second-quarter results on Tuesday.

"Earnings reports provided additional insight into gaming operator demand and financial performances," Gordon said.
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