Las Vegas Sands has second quarter loss and its shares slip

02.08.2009, Las Vegas Sands Corp posted a net loss this week on reduced spending at its casinos and hotels, sending its shares down about 7 %. Sands, which operates the Palazzo and Venetian resorts on the Las Vegas Strip and two casinos in the Chinese gambling enclave of Macau, posted a net loss of us$ 171.3 million, or 34 cents a share

Excluding one-time items, the company reported a profit of 1 cent per share, beating the average Wall Street estimate of a 1 cent per share loss, according to Reuters Estimates. "It's an in-line quarter at this point," said Sterne, Agee & Leach analyst David Bain. "Overall, we're still concerned about Las Vegas, but we look at Las Vegas Sands as a play on Asia."

In addition to its Las Vegas and Macau operations, Sands opened a casino in Pennsylvania earlier this year. The Las Vegas-based company will next open a gambling resort in the city-state of Singapore early next year. "There is upside for the stock with Singapore in the first quarter," Bain said. "But it is somewhat of a binary event ... It will be a huge opening."

Sands said second quarter net revenue fell 4.8 % to us$ 1.06 billion and it is now targeting annual cost cuts of us$ 500 million. The Reuters Estimates view for the second quarter revenue was us$ 1.09 billion. "We are singularly focused on the execution of our plan," CEO Sheldon Adelson said on a conference call, noting that goals include maximizing cash flow, opening the Singapore property and generating liquidity.

The company, which has come close to violating loan agreements and suspended work on several projects, said it is still looking to sell non-core assets and may seek to access public or private capital markets to raise financing, which may include the sale of a minority stake in its Macau operations.

As of June 30, Sands said its U.S. debt-to-EBITDA (earnings before interest, taxes, depreciation and amortization) ratio stood at 6.76, just under the maximum of 7 allowed under its debt covenants. For Macau operations, the ratio stood at 3.83 against the maximum allowable ratio of 4, the company said.

Sources have told Reuters that Sands is contemplating an initial public offering in Hong Kong for a portion of its Macau holdings. "We've not finally decided which route to take," Adelson said, noting the company hopes to decide within the next 30 days.

Sands' shares, which rose more than 9 % to close at us$ 11.15 on the New York Stock Exchange, were down more than 7 % after hours.

Yogonet.com

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