Las Vegas Sands posts wider 3Q loss as taxes rise

Oskar Garcia
Associated Press

Casino operator Las Vegas Sands Corp. on Thursday reported a larger third-quarter loss as gambling markets continued to struggle, taxes increased and the company pressed ahead on developing a resort in Singapore.

The Las Vegas-based company led by billionaire Sheldon Adelson benefited from more gamblers visiting Macau, the Chinese gambling enclave, but was hurt in its home market of Las Vegas where bettors have stayed away from tables and rooms have been less profitable.

However, comments by Adelson that casinos’ bad luck may be turning around sent shares up more than 8 percent in aftermarket trading.

Las Vegas Sands posted a loss of $123 million, or 19 cents per share, for the three months ended Sept. 30. It said those results were hurt by increased income tax expenses, which cost the company $73.7 million. The results compared with a loss of $32.2 million, or 9 cents per share, a year earlier.

The company said its adjusted income — which does not include many one-time items including the taxes, interest expenses or stock dividends — totaled $20.1 million, a profit of 3 cents per share. That beat analyst expectations for losses of one penny per share, according to a Thomson Reuters poll.

Its revenue rose 3 percent to $1.14 billion from $1.11 billion during the same quarter last year, but came in slightly shy of analysts’ $1.17 billion estimate.

New casinos in Bethlehem, Pa., and Macau helped the company grow its overall gambling revenue more than $100 million to $908 million. But casino revenue at its Venetian and Palazzo resorts on the Las Vegas Strip fell to $99 million from $113.2 million a year earlier.

Sands’ revenue fell in food and beverage, hotel rooms and retail, while the company’s overall expenses rose slightly.

Adelson told investors he was seeing strong signs that bad times might be turning around in Las Vegas because of a return of convention business and group bookings.

“Just like night follows day and day follows night, there are peaks and valleys throughout the economic cycle and virtually everything in life,” Adelson said. “There is no doubt whatsoever that the economy is returning and will return.”

The outlook sent shares of Sands up $1.27 to $16.02 in aftermarket trading after closing Thursday at $14.76, up $1.59, 12 percent.

Adelson said Sands has booked more room nights for groups and conventioneers for 2010 compared with what it expects to fill for this year.

Group bookings account for a significant chunk of business for casino-resorts, and are at the center of Sands’ strategy in Las Vegas. But fewer business travelers have come to Las Vegas this year because of several factors, including money and wanting to avoid scrutiny for traveling to tourist destinations.

Rob Goldstein, a Sands executive vice president in charge of operating its Las Vegas properties, said the company was gradually increasing its room rates and trying to avoid price cuts generally made to keep rooms filled.

“We turn down a lot of business these days because we don’t want the rate,” Goldstein said.

Rooms cost more than $170 on average during the quarter at the Venetian and Palazzo, though slightly more at the Palazzo. The rooms were just under 90 percent occupied for the quarter.

Adelson said the company was focusing on its future developments, including the $5.5 billion Marina Bay Sands to open in Singapore next year.

The company said it is continuing to cut costs but already has made 90 percent of the cuts it plans; in all, the cuts are to save the company $500 million per year.

Sands also is working to lower its $11.76 billion in debt as of Sept. 30 by raising capital, selling noncore assets and cutting costs at its resorts.

Several large Las Vegas-based casino companies have reported this week that they are struggling as consumers remain conservative in their spending, especially on leisure and gambling.

The world’s largest casino company, Harrah’s Entertainment Inc., said Tuesday it lost $1.6 billion for the quarter, including accounting for a $1.33 billion drop in the value of its assets. Profit also fell at Wynn Resorts Ltd. and Boyd Gaming Corp., which said it will wait at least three years before finishing its $4.8 billion Echelon project, which sits empty on the Las Vegas Strip.

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