Harrah’s, MGM Mirage and Wynn have posted their results for the 3rd quarter of 2007, and it’s quite a mixed bag of profits, losses and unexpected lawsuits.
Since Harrah’s is the middle of a private takeover, its earnings did not affect their stock value very much. Total revenue grew by 13% compared to the 3rd quarter of last year, and while earnings per share fell short of the expected $1.05 per share they still managed to grow to $1.00 per share, a 6.4% increase.
The big hitch this quarter is the discovery of a $1.8 billion lawsuit (with an extra $1 billion owed in interest) attached to the purchase of Park Place Entertainment. Previous to the Harrah’s takeover, Park Place had agreed to develop a casino in the Catskills along with the St. Regis Mohawk Tribe. When they were unable to deliver due to lack of permits, the tribe members sued, and won by default since Park Place’s lawyers failed to show in court. Harrah’s now intends to “vigorously contest” this lawsuit in the U.S. Federal Court, as investors watch closely over the issue.
The MGM Mirage had a hard year, and Wall Street lowered its expectations accordingly, yet it still failed to meet them: last year’s 3rd quarter income increased 54 cents per share, and this year’s expectations were of only 50 cents per share. However, construction costs for CityCenter and Macau have been higher than expected, and renovation costs at the Bellagio were also steep, not to mention a one-off Hurricane Katrina insurance settlement. All of this brought the profit down from a net 62 cents to an adjusted 42 cents per share. But the construction investments are expected to start paying off soon, with Macau opening on December 18, and plans have been announced for developing a hotel resort in Abu Dhabi.
The Wynn casino, on the other hand, reaped excellent revenues from its new Macau property. Wynn Macau only opened on September 2006 – so it has no previous 3Q results to compare with – but its first set of results is quite encouraging, with a net revenue of $347.7 million. But not only Macau fared well: with the help of a boost in the Vegas property in table games and hotel occupation, the entire company showed a net income of $0.67, after sustaining losses of $0.01 per share in the same quarter last year.