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Wynn Resorts posts profit

13 Feb 2008

By Howard Stutz

LAS VEGAS, Nevada -- Wynn Resorts Ltd. showed its reliance on the Macau gambling market Tuesday.

Buoyed by results from its expanded Wynn Macau casino, Wynn Resorts said its fourth-quarter net income was $65.5 million, or 57 cents a share, for the period ended Dec. 31. A year ago, Wynn Resorts lost $55.4 million, or 55 cents a share. Analysts polled by Thomson Financial had expected the company to earn 68 cents a share.

Companywide quarterly revenue rose 26.2 percent to $711.3 million from $563.6 million.

In Macau, Wynn Resorts opened a 75,000-square-foot casino expansion in December which grew the casino area to 205,000 square feet, adding space for both the mass market and VIP customer segments. In the fourth quarter, Wynn Macau generated property cash flow, defined as earnings before interest, taxes, depreciation and amortization of $99.6 million and a full-year cash flow of $364.1 million. The company said it had a 25.7 percent cash flow margin on net revenue in the quarter, and a 26.2 percent cash flow margin on net revenues for the year.

At Wynn Las Vegas, cash flow was $97.3 million in the quarter and $417 million for the year, a 25 percent increase.

"Macau is certainly strong and the numbers were consistent with what we would come to expect from that market," Deutsche Bank gaming analyst Bill Lerner said following the company's conference call with analysts and investors.

"Las Vegas came in a little lighter than expectations," Lerner said. "But it was consistent with some of the softness we've seen in that segment of the market. The outlook is not much different for The Venetian or some of MGM Mirage's segments."

Wynn Resorts Chairman Steve Wynn told analysts the company's Las Vegas cash flow was affected by a $1,000 per employee bonus that the company handed out at Christmastime to workers. Wynn paid all the taxes on the bonus and the payout amounted to a $5 million charge from cash flow.

"It was an asterisk on our earnings," Wynn said.

Lerner called the bonus "the cost of doing business to retain good employees."

In response to a question on the viability of the Las Vegas market in January, Wynn refused to speculate or offer any concrete figures. Analysts said MGM Mirage executives gave Wall Street a small preview on how the latest quarter is shaping up.

"I don't think that's a good idea," Wynn said. "They have a lot more properties in the market that cover all segments. We cater to one market, rich folks."

In China, Wynn Macau broke ground on its Diamond Suites hotel tower addition that is expected to open in 2010. In a statement, the company said it is actively designing a 52-acre parcel on the Cotai Strip, but he didn't set any time frame for development.

In Las Vegas, the company said Encore, a 2,034-room hotel with a 72,000-square-foot casino being built next to Wynn Las Vegas, saw its price increase by $100 million to $2.2 billion. The resort is expected to open in early 2009.

Wynn Resorts shares fell 4 cents, or 0.03 percent, to close at $119.84 on the Nasdaq National Market. The company reported earnings after the market closed and shares fell more than $6 in after-hours trading before rebounding sightly.

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