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Las Vegas Sands Corp. posts $11.2 million loss

1 May 2008

by Arnold M .Knightly

LAS VEGAS, Nevada -- Las Vegas Sands Corp. posted a first-quarter loss, driven by higher construction costs, the slowing economy and increased competition in Macau, the casino operator reported Wednesday.

The casino company reported a loss of $11.2 million, or 3 cents per share, for the quarter ended March 31, compared with a profit of $90.9 million, or 26 cents per share, a year earlier.

Net revenue increased 71.7 percent to $1.08 billion in 2008 from $628 million last year, driven by the opening of the $1.9 billion Palazzo in late December and the opening of the $2.4 billion Venetian Macau in August.

"We had an interesting quarter, to say the least," Las Vegas Sands President Bill Weidner said during an earnings conference call Wednesday. Besides opening the Palazzo, work continues on $12 billion worth of projects in Singapore and Macau.

The company is also working to expand regional ferry service from Hong Kong to Macau to seven days a week, 24 hours a day.

Casino revenue at the Sands Macau fell 23.6 percent, to $264.4 million for the quarter from $346.1 million in 2007, a reflection of the increased competition the company is facing.

Some of the new competition comes from MGM Mirage's $1.25 billion MGM Grand Macau, which opened in December. Wynn Macau's casino expansion also opened during the quarter.

Las Vegas Sands' cash flow, described as earnings before interest, taxes, depreciation and amortization, increased for the quarter, rising 34.4 percent to $288.3 million, compared with $214.4 million for the same quarter last year.

Quarterly gaming revenues jumped 70.8 percent, to $795.4 million from $465.7 million in 2007. The slumping economy dropped the average daily room rate in Las Vegas by $2 to $274 for the first quarter. Room occupancy at The Venetian decreased to 91.1 percent, compared to 98.8 percent from last year. Revenue per available room fell 8.4 percent, to $250 from $273.

In its first quarter of operation, the Palazzo's average daily room rate was $244, with occupancy at 79.1 percent, generating revenue of $193 per available room.

Weidner said that the company was happy with the results from the combined Strip resort "despite a more challenging economic environment." He added that the pending opening of the Broadway musical "Jersey Boys" on Saturday will complete the gradual improvement of the Palazzo's amenities.

"We're very confident the combination of the Palazzo and The Venetian will continue to make this the destination place in Las Vegas overall," he said.

The earnings report was issued after the markets closed. Las Vegas Sands shares fell $7.47, or 9.8 percent, to $68.75 in after-hours trading on the New York Stock Exchange.

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