In early afternoon trading, the share price of MGM was down 3.7% ($2.52) to $65.80 and the share price of Las Vegas Sands was down 4.6% ($4.04) to $84.53. Shares of Wynn Resorts, which will release results on Monday, also took a hit, falling 3.6% ($3.85) to $103.20 in afternoon trading.
Citing lower gambling revenue at its mass-market casinos on the Las Vegas Strip, MGM Mirage reported first quarter net income of $168.2 million, or $0.57 per share. The result is a 17% increase from the first quarter of 2006, when net income was $144 million, or $0.49 per share. However, diluted earnings per share, at $0.55, came in below analysts expectations of $0.63 per share.
During the quarterly conference call MGM Chief Financial Officer Jim Murren said that gambling revenue from its Las Vegas casinos was negatively affected early in the quarter by the closure of a key highway linking Southern California to Las Vegas. On the upside, margins improved at its MGM Grand and Mandalay Bay properties and Murren said strong operating trends in Las Vegas and elsewhere are continuing in the second quarter. MGM's revenue per available room at its Strip properties rose 9% during the first quarter.
Some analysts suggested that operators such as Las Vegas Sands who already have casinos up and running in Macau garnered more of the high-end play in Las Vegas because they were able to cross-market their properties to Asian gamblers. MGM chief executive Terry Lanni acknowledged the situation, saying MGM will be at a disadvantage until it opens the first of two planned casinos in the Macau market toward the end of the year.
In addition to developing its first Macau property, MGM is focused on constructing its $7.4-billion Las Vegas CityCenter project. The 66-acre development includes a 60-story, 4,000-room resort casino, 2,700 for-sale residential units, two 400-room non-gaming hotels and 470,000-sf retail and entertainment district. The residential units are expected to $2.7 billion in revenue.
Las Vegas Sands Corp. reported first-quarter net income of $90.9 million, or $0.26, a 25% decrease from the first quarter of 2006, when profit was $121.8 million, or $0.34. The decrease in profit was attributed in part to spending on new hotels, including the first phase of 20,000 planned new rooms on Macau's Cotai Strip and additions in Las Vegas. The company's debt load has increased to $4.42 billion from $1.17 one year ago.
First quarter revenue was $628.2 million, up 18% compared to the first quarter of 2006.Excluding pre-opening expenses and development costs, the company reported earnings of $0.32 per share, which met analysts average expectation for per-share earnings and beat their average revenue expectation of $607.7 million.
Macau is the only city in China where casino gambling is legal. The region last year overtook the Las Vegas Strip as the world's biggest gambling hub. Las Vegas Sands was the first US company to begin operations there, opening the Sands Macau in 2004. The company is now developing the $1.8 billion Venetian Macau on the Cotai Strip. More are in the works. The company says it will spend up to $11 billion developing properties in Macau.
Like MGM, Las Vegas Sands also is developing an integrated resort on the Las Vegas Strip. The Palazzo project includes a 3,000-room hotel-casino addition to the Venetian, 300,000 sf of retail, an expansion of the Sands Expo and Convention Center and a recently added 300-unit, ultra-luxury condo tower atop a flagship Barney's retail store fronting the Las Vegas Strip. Las Vegas Sands Corp. says the $465-million condo project could generate as much as $1.94 billion in sales, which equates to an average sales price of $2,000 per sf, making it the priciest residential offering ever on the Las Vegas Strip.
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