Costs, weaker economy drive Las Vegas Sands to 1Q net loss

The Palazzo hotel-casino is shown in Las Vegas in this Jan. 16, 2008 file photo. Las Vegas Sands Corp. plans to win back gamblers in Macau and is banking on strong growth from its new resort in Las Vegas after intense competition abroad and dwindling tourism at home led the casino giant to an $11.2 million loss in the first quarter. (AP Photo/Jae C. Hong, File)

LAS VEGAS—Las Vegas Sands Corp. plans to win back gamblers in Macau and is banking on strong growth from its new resort in Las Vegas after intense competition abroad and dwindling tourism at home led the casino giant to an $11.2 million loss in the first quarter.

The casino company run by billionaire Sheldon Adelson saw its shares fall nearly 9 percent in after-hours trading Wednesday on word of the quarterly loss, which equaled 3 cents per share, compared with a profit of $90.9 million, or 26 cents per share, a year earlier.

Excluding items such as losses on sold assets and expenses related to opening new casinos, adjusted earnings totaled $23.6 million, or 7 cents a share for the period ended March 31. That was down from $114.6 million, or 32 cents per share, a year earlier.

Analysts surveyed by Thomson Financial predicted earnings of 36 cents per share for the latest quarter.

Sands said quarterly revenue increased 72 percent to $1.08 billion from $628.2 million a year ago, boosted by new casinos. Analysts expected revenue of $1.24 billion.

Las Vegas Sands shares fell $6.52 in after-hours trading. The shares had gained $2.39, or 3.2 percent, to end the regular trading session at $76.22 before the results were released.

"While we remain pleased with our progress in the steady execution of our global growth strategy, our first-quarter operating results reflect both an intensely competitive operating environment in Macau as well as a weaker economic environment here in the United States," William Weidner, Sands president and chief operating officer, said in a statement.

The Las Vegas-based company owns The Venetian Resort & Casino on the Las Vegas Strip and the adjoining $1.9 billion Palazzo resort, which opened in January. In the booming Chinese territory, it owns the Sands Macao and Venetian Macao.

On a conference call with analysts, Weidner said the company "paid the price" in the first quarter for an earlier decision to increase inventory for Las Vegas tourists rather than conventioneers in 2008.

Tourism traffic in Las Vegas has suffered in a weakening economy, and the company saw "lower occupancy than we planned," Weidner said.

Net revenue at the company's Las Vegas properties rose 21 percent over the previous year to $351.6 million.

In China, net revenue at the Sands Macao dropped 23 percent to $268.3 million, while the Venetian Macao, which opened in August, posted net revenue of $455.7 million.

Weidner said the company saw a significant loss of market share among high rollers in Macau. Competition continued to increase as MGM Mirage Inc. opened its first venture in the enclave, MGM Grand Macau, in December.

Weidner said Sands already had moved to win back those gamblers. The company boosted commission rates to junket operators who deliver VIPs to the casinos. Weidner said the company also plans to increase its credit to VIPs and hopes to soon ramp up 24-hour ferry service from Hong Kong to increase traffic.

Adelson and Weidner said they remain bullish on Sands' success in Asia, particularly in light of recent comments from Macau's leader.

Edmund Ho told Chinese lawmakers last week that no new casino concessions or sub-concessions would be issued in the foreseeable future, and additional slot and table games would be limited.

Projects already approved, including Sands' developments, won't be affected, Weidner said.

Adelson said he believed the announcement was a reaction to pressure from Sands and others wanting to discourage proliferation of smaller casinos and encourage development of large destination resort-style properties.

"Our goal is to turn a city of seedy, backwater gambling dens into a city of convention business travel and business and leisure travel," Adelson said. "I think we're speaking to welcome ears when we're suggesting that you got to have to have a certain percent of exhibition space, convention center, shopping space."

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