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said during the call in which
the company reported a 20
percent decrease in income and a large
drop in cash flow at the Wynn
Las Vegas. Wynn also announced during the
call that his company will
develop two 2,600-room hotels and a
convention center on the site of a
golf course behind the Wynn Las Vegas.
He said plans for the project will
be ready by December.
His comments come after Station Casinos, MGM Mirage,
Harrah's Entertainment and some smaller gaming operators
have confirmed hundreds of layoffs.
Last week, locals gaming operator Station Casinos
let go approximately 70 corporate-level workers. In
mid-April, MGM Mirage said it was laying off some 440
management employees around the country. The company
acknowledged that the layoffs were in response to the
souring national economy but also part of a corporate
belt-tightening program begun last year.
Wynn said he was making the promise to not layoff
workers because having them worry about "who's next" is
"negative and counterproductive," no matter what kind of
short-term fluctuations the economy is experiencing.
"In my career, I have never had a layoff," Wynn
said, noting this is the sixth slowdown he has been
through in 40 years. "We don't intend to do it. We
consider the morale and feeling of security our
employees have is the most important asset the company
owns. More than our buildings or even our concessions."
Wynn Resorts said increased operating expenses helped
drive down the company's income for the quarter.
Net income decreased 20 percent to $46.7 million,
or 41 cents per share, for the first quarter ended March
31, down from the $58.4 million, or 54 cents per share,
a year earlier. The decrease
comes even as revenues increased 22.5 percent to $778
million from $635.3 million.
However, operating expenses outpaced revenue growth,
increasing 30.4 percent. The jump was largely driven by
a $123.7 million increase in casino expenses, a $20
million write-off to cancel the Strip resort's
"Spamalot" production and an $11.2 million increase in
depreciation costs.
Companywide cash flow, defined as earnings before
interest, taxes, depreciation and amortization,
increased 4 percent to $197.8 million, driven by Wynn
Macau. Cash flow in the
Chinese enclave increased 63.8 percent to $129.4 million
while a lower table hold percentage dropped the Wynn Las
Vegas' cash flow 38.5 percent to $68.4 million.
Wynn Resorts opened a 75,000-square-foot casino
expansion in December. The
Macau property generated $1.4 million in cash flow per
day during the first quarter, Wynn Resorts Chief
Financial Officer Matt Maddox said during the call.
"The numbers out of Macau were pretty fantastic,"
said Robert LaFleur, an analyst with Susquehanna
Financial Group, who said he thought Wynn benefited from
a high-end position in the market.
"Las Vegas was tougher," LaFleur said.
Wynn Las Vegas experienced a softening in business
volumes that adversely affected the company's bottom
line. The Wynn Las Vegas
experienced a 32.4 percent decrease in daily table games
win and an 11.3 percent decrease in daily slot machine
win per unit. Wynn pointed to
figures showing slot machine revenues dropped in Las
Vegas from $60.4 million to $52.7 million. He called the
decline most pronounced in quarter machines.
"That is exactly the narrative," LaFleur said, "which is
that the downturn in Vegas is much more concentrated in
the middle and low end of the market."
Average daily room rates dropped $12 to $298,
while revenue per available room slipped $13 to $285 per
day with occupancy rates at 95.8 percent, down from 96.2
percent. Deutsche Bank analyst
Bill Lerner said Wynn Resorts' business in Las Vegas was
down "relatively modestly," and the company's losses
were compounded by poor luck in a typically lucky
three-month period that draws baccarat players during
Chinese New Year.
Wynn said his strategy for marketing the opening of the
$2.2 billion Encore in December to high-end customers
will not change even if the economy remains weak.
"If the market is soft in December ... I don't
care," Wynn said. "My colleagues and I are paid to run
hotels in good times and fair times. I don't give a damn
about the short-term market implications. This is not a
company that gives a damn about short-term markets."
The property will start taking reservations for the
hotel on June 15. The company has begun hiring for the
opening within the company, and will begin accepting
outside applications July 1. The
mixed-use development includes a 72,000-square-foot
casino with restaurants, retail and other amenities.
Wynn Resorts shares increased $2.85 cents, or
2.71 percent, to close at $108.19 on the Nasdaq National
Market. The company reported earnings after the market
closed. Shares fell $4.34, or 4.01 percent, to $103.85
in after-hours trading.
Contact reporter Arnold M. Knightly at
aknightly@reviewjournal.com
or 702-477-3893. Bloomberg News and The
Associated Press contributed to this report.
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