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StumbleGaming stocks fall on news of Macau growth
Shares of Wynn Resorts drop despite upgrade from Fitch Ratings
Published Monday, Oct. 12, 2009 | 10:51 a.m.
Updated Monday, Oct. 12, 2009 | 5:50 p.m.
The government of Macau said Monday that its officials met with gaming officials to discuss limits on growth of the casino industry in the Chinese administrative region.
Despite an improved credit outlook for Wynn Resorts Ltd., its shares and those of competitor Las Vegas Sands Corp. fell Monday after the government of Macau said it's reviewing growth of the casino industry and that the six gaming operators there agree it "shouldn’t expand infinitely."
Wynn fell 2.9 percent to $65.88 and Las Vegas Sands was off 1.8 percent to $17.72.
Local reports said the Chinese gambling enclave is considering imposing limits on table numbers, removing gaming operations from residential areas and raising the age limit for entering casinos from 18 to 21.
Wynn Resorts Chairman and Chief Executive Steve Wynn told Bloomberg Television the plans to limit slot machines in residential areas and impose age restrictions on gambling will not hurt earnings at subsidiary Wynn Macau Ltd.
Age limits would have “absolutely no effect on us,” Wynn told Bloomberg Television. The restrictions are “a good idea,” he said.
“We don’t have slots in residential neighborhoods,” Wynn told Bloomberg. “Someone should be earning their own living before they think about gambling.”
Earlier Monday, a debt-rating company lifted its outlook on Wynn Resorts after the company raised $1.87 billion in an initial public stock offering of 25 percent of its Macau assets.
Fitch Ratings of New York said it revised the rating outlook for Wynn Resorts and its subsidiaries to positive from stable.
"The positive outlook also recognizes an improved operating outlook in Macau following relaxed travel restrictions that were recently implemented," Fitch said.
Wynn initially raised $1.63 billion with the IPO of Wynn Macau Ltd., but with exercise of an over-allotment option the total was lifted to $1.87 billion. The stock rose 6.9 percent Friday, its first day of trading.
Fitch affirmed Wynn's existing speculative-grade corporate credit ratings including the Wynn Resorts issuer default rating at "B+."
Fitch also assigned a "BB/RR2" rating to Wynn Las Vegas LLC's $500 million senior secured first mortgage notes due 2017 that were issued last week.
The equity issuance leaves Wynn with about $2.8 billion of available cash while last week's $500 million note issuance is leverage-neutral as the money will be used to repay outstanding bank debt while pushing debt maturities from 2012-13 to 2017, Fitch said.
Barbara Cappaert, an analyst at KDP Investment Advisors Inc., said in a report to investors last week that the recent equity and debt deals indicate "Wynn is amassing cash and liquidity" to finance further potential growth in Asia as well as the United States.
Wynn is among the bidders to redevelop the Aqueduct Racetrack in New York in a project that would involve the installation of 4,500 gaming machines there.
Fitch also noted growth possibilities for Wynn in its report.
"Although Wynn's strong liquidity profile and substantial cash balance provides resources for meaningful debt reduction, the company may instead choose to preserve cash to invest in potential growth opportunities," the company said.
For the second quarter ended June 30, Wynn reported revenue of $723.3 million, down from $825.2 million in the year-ago quarter as the recession pushed occupancy and room rates down in Las Vegas and table game win fell in Macau.
Net income of $25.2 million, or 21 cents per share, was down from $272 million or $2.42 a year earlier.
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Well this is certainly good news coming out of Wynn. We will plan on staying at Encore next month.
Stevie's gonna wait until he can't get any higher and SELL OUT! mark my words!
Was the picture taken out of a moving car with a camera phone? Iris up dude
The Chinese government may change its mind ten times over the next ten years. Regardless, that culture loves to gamble, and the legalized gambling genie is out of the bottle, there. Resorts are popping up in Singapore. Dubai is closer to China than Las Vegas, too. All signs point to diminishing returns for Las Vegas' international market. Properties operated over in that part of the world are the future.
Steve just loves being in bed with the Chinese CommunistCapitalistSocialistMarxistCapitalists.
Singapore is laughing about the silly Macau regulations and restrictions. And Las Vegas Sands will be at both places, so it will hit LVS the least. And Genting Singapore is also happy when there will be not so many tourists flying into Macau but rather to Singapore....
Thank the casinos opening overseas for our lower counts here.
No need to fly across the world to come here now.
Why is the article title about gaming stocks and the article 98% about Wynn?
No reason to push the panic button. The new regulation says minimum age to enter a Macau casino is 21 (formerly 18). Wall Streets analists obviously priced-in this loss of customer level and adjusted the new "value" of the companies. Plus some speculation factor. This is a very rough adjustment that we saw yesterday on Wall Street. I don't think it will have such a big impact as these younger people don't have so much money to gamble with, anyway. The stocks are still much higher than 3 months ago, so I wouldn't be concerend at all. And yes, the clever Las Vegas Sands marketing people will probably divert the flight arregements for their younger jungeteers and fly them into Singapore than to Macau. Not a big difference, and certainly a great experience for these high rollers.
Net income ***PLUMMETS 90%*** from 272 million to 25 million
YET..... stock grows 6.9% and Fitch says, Hey their great!
FOOLS!!!! STUPID!!!!! GO EX MADOFF INVESTORS, HERE IS A SURE BET....
I really believed that 80% of people are really stupid. But Now I believe that perhaps it's in the 90% range.
wynn is lost, his ruining vegas with over priced food, take care of whales and idiots like michael jackson, he's drove off the regulars. come see my magic act, my volcano, my pirate ship, pay $50 for a burger and drink, leave your money in my slots and get the hell out.
With the way the strip properties raped the touriest,high priced rooms,over priced food,and slots and tables that take your money faster than a pick pocket,geez,its a wonder what happened to vegas?
Oh how I agree with the last two comments
I agree, too. Though I blame Wynn less than I blame all the other copy-cats. When Wynn started targeting the 5% of the population with large discretionary budgets, he was attacking a niche. What made all the others think that they too could all crowd into this market, is beyond explanation. We all know how this ended. And we could all see it coming.
The positive thing of all this is Wynn is solid right now even though the economy is devestating Las Vegas.Now if they turn their attention to every customer a provide all gamblers with a good service for a fair price Wynn will be in to nithes and will dominate Vegas.How much does Wynn want to be the light of guidence in a strugling industry right?How much does Wynn want to be the leader?How much does Wynn want to see the city that made him become the world travel center.Wynn buy the defunct Fountain Bleau rename it and cater to the average joe who wants to come to Vegas and not spend a fortune on rooms and food leaving him to gamble more.Give him the same quality room and the same quality of service as Wynn and Encore but at a better price tag and he will open the doors to Vegas's return to prominence.
I've known Vegas for 50 years now, It's been a wonderful place, and has always been in a constant state of change. Over the last 2 decades I've watch the cooperate junk bond masters kill the goose that laid the golden egg. Is there a CEO in Vegas who understands what made Vegas great is value?
A couple of decades ago Vegas offered a lot of bang for the tourist dollar! Before casinos were taken over by corporations, that built multi-billion dollar monuments to their ignorance and greed. Out of state family & friends don't come to visit near as often as they use to, their complaints are the same "everything has gotten so expensive, minimum gaming bets, food, and shows" are the most common complaints I hear.
After Atlantic City opened most folks couldn't resist the temptation to go visit, the visitors that I know said at the time they'd never go back. They were expecting the Vegas experience, what they found was that everything was so expensive! And nothing like Vegas at all, so they continued to make the pilgrimage to Vegas.
It seems the longest lines in Vegas these days are casino executives lining up to re-negotiate loans, bonds, and to file for bankruptcy, I'm left to ponder two things, is there anyone at the head of the line asking for their "player's rewards card" and will these actions result in low hanging fruit that the mob won't be able to resist thus resulting in Vegas becoming a mob run city again?
Indian Casinos are hurting Vegas more and more. Forget the Chinese. Wake up Las Vegas your # 2 now. Indian Casinos # 1. You have been off target for years now. You give little and get back little. You'll be done soon if you don't change your way of thinking.
The Indian Casinos are great! Californians are slap happy that they don't have to make that trek across the desert anymore! San Manuel, Agua Caliente, Pachenga, all of 'em are raking in the profits which used to belong to downtown Vegas, and Nevada Stateline. So what does this tell you greedy Vegas Casinos? BRING BACK THE VALUE!!!!!
Watch out when Singapore's 2 Mega-Resorts are finally complete and ready to go. With Macau's newest resorts and more to come, plus Singapore with it's 2 big projects, and several casinos in Malaysia and also one big project in the Philippines, chances are slim that Asian high rollers will take the long trip hastle from their country to Las Vegas. The times of the big baccarat games are counted. Also , Japan will have casinos very soon, too. And what this means, is clear: The nonstop flights from Narita into McCarran will be cut in half or even less.