Q1 Earnings Are Mixed

In releasing their first-quarter results, Las Vegas Sands and Boyd Gaming had reason to envy MGM Mirage.

Sands' first-quarter profit dropped from $121.8 million to $90.9 million, a 25-percent decrease compared with the same quarter in 2006. Billionaire Sheldon Adelson's company has taken on debt in order to build a new 20,000-room hotel on Macau's Cotai Strip and a 7,000-room hotel, the Palazzo Resort Hotel Casino, on the Las Vegas Strip.

The company is betting the investments, particularly in Asia, will pay off in spades, and there are good signs it's a safe bet. While profit was down, revenue was up 18 percent in the first quarter to $628.2 million, led by the Sands Macao, which accounted for 57 percent of the company's entire revenue last year. The Sands is hoping to cash in on more in Asia than just Macau, with a $3.6 billion project in Singapore set to open in 2009.

The year didn't start off as well for Boyd Gaming, whose numbers were down all the way around.

After doubling its revenue from $22.9 million in the fourth quarter of 2005 to $56.3 million in the same period the following year, the company's first quarter of 2007 saw a significant drop. Income fell by almost half, from $65.3 million to $33.5 million, and revenue dipped 12 percent, from $589 million to $517 million, compared with the first quarter last year.

Boyd officials cited several reasons for the declines, one being the closing of the Stardust Casino in Las Vegas. A number of future projects could turn the tide for the company, including the planned $3.3 billion Echelon Place, to be completed in the third quarter of 2010.

For MGM Mirage, on the other hand, the good news just keeps coming. The company reported record-breaking results, with year-over-year revenue of $1.9 billion, an increase of 9 percent compared with the same period in 2006. This tops fourth-quarter 2006 results, when the company posted an 11-percent increase to $1.85 billion from $1.66 billion in the same period of 2005.

MGM said its first-quarter 2007 non-gaming revenue was driven by strong room pricing at the company's Las Vegas Strip resorts, the re-opening of the Beau Rivage in August 2006 and the continued impact of new restaurants, nightclubs and shows at several properties.

The company also posted record first-quarter EBITDA (earnings before interest, taxes, depreciation and amortization) of $655 million, a 7-percent increase over the prior year.

A number of other projects could keep MGM performing strongly:

• the development of a second resort in Macau
• an increase in the CityCenter budget to $7.4 billion
• an agreement to acquire 34 acres on the Strip adjacent to Circus Circus, which brings the total to 78 acres for future development
• an agreement to invest in the M Resort, an 80-acre mixed-use development

Other hotel companies reported mixed results. Gaylord Entertainment's first-quarter profit plunged 74 percent to $3.5 million in the first quarter of 2007 from a record high of $13.2 million a year earlier, but company officials said the decline was expected because of higher than usual business in convention center hotels in 2006.

Hilton Hotels fared better with revenue up 29 percent in the first quarter of 2007 to $1.86 billion, compared with $1.44 billion in the same quarter last year.

Hilton's profit was down 9 percent in the first quarter though, to $95 million compared with $104 million last year. The decline was mainly due to hotel renovations in New York and Hawaii.