Tourism and Gaming - Monday 4th of June 2007

One of the tasks that I always liked as a business reporter covering major public casino operators was listening in to the companies quarterly conference calls with investors and analysts.

The calls typically take place on the same day the companies announce their quarterly results. Company bosses usually run through the numbers, often emphasizing the good and explaining the bad.

After the executives have their say, Wall Streeters pose questions. Sometimes they want a more specific number than the company provided in its Securities and Exchange Commission filing or the earnings press release, and sometimes they want to challenge the executives excuses for sorry performances. Although investors and reporters are welcome to listen in, they typically dont ask questions, letting the analysts do the work.

Sometimes the companies will use the earnings announcement as an opportunity to break some significant news to a wide audience, and the news-making element adds a lot of interest to those companies conference calls.

Other calls are particularly compelling because the executives themselves are interesting.

Examples of that type of call were those held by former Aztar Corp. Chairman Paul Rubeli. Rubeli, whose company owned the Tropicana in Las Vegas and the Ramada Express in Laughlin, was combustible and didnt suffer fools gladly. I would listen to some Wall Street-type challenge something Rubeli said earlier in the call, or question the companys strategy, knowing I was about to hear some fireworks. And Rubeli didnt disappoint. Hed tell the guy his question was stupid or ridiculous, as hed boil over, fuming against the idiots who didnt understand Aztar.

Other times hed chide the questioners to do better.

"Its time to do some homework here," he told analysts in a 2003 call I covered, before he launched into a 35-minute diatribe against the then-governor of New Jersey, who had, Rubeli said, endangered the Atlantic City casino business by proposing a gaming tax increase.

Other executives are more subtle, but still get their points across in an entertaining way.

MGM Mirage Chairman Terry Lanni and Wynn Resorts Chairman Steve Wynn are examples of executives who employ humor spiced with an occasional dig to make their points. For example, Lanni used his most recent quarterly call to criticize the boorish NBA All-Star Game crowd that alienated visitors in Las Vegas for Chinese New Year. "They came for purposes other than attending the game, and they werent very good for Las Vegas," said Lanni, a master of understatement. Sidekick Jim Murren, MGM Mirage president, chimed in, saying NBA Commissioner David Stern "could keep his All-Star Game out of Las Vegas."

Ive long wanted to sit in with the corporate executives as they handled the call, and watch how they dealt with the oddball questions and tough criticism. I had always pictured in my mind three or four executives sitting around the CEOs desk, with a couple of public relations-types hovering around.

Over the years Ive asked a couple of companies to let me sit in on a call from the inside, but never got an OK. But my request was finally approved and on May 7 I got the opportunity to watch the Wynn Resorts call.

I arrived at the Wynn executive offices just before 1:30 p.m., and made my way back to the conference room (after bypassing the pistachio cannolis at the receptionists desk, probably left over from the earlier-in-the-day board meeting). As a Wynn assistant ushered me into the conference room, I realized I had underestimated how many folks were involved.

There was Steve Wynn at the head of the table, flanked by his top dozen-or-so executives, seated around the table. Another 10 or so were seated in chairs around the walls of the room.

I had one of those outside chairs, right behind Wynn Resorts President Ron Kramer, the companys New York-based finance guru, who was seated at Wynns left hand.

Investor Relations boss Samantha Stewart organized the call, as well as a large PowerPoint representation on a plasma screen on the wall opposite Wynn, showing after-hours trading in the companys shares and the names of questioners on the conference call.

Wynn and Kramer handled the call itself. Kramer ran through the results for the quarter that ended March 31 (outstanding numbers, with $58.4 million in net income from revenue of $635.3 million, on the strength of robust results in Macau and Las Vegas), and then Wynn took over.

First, he made clear that he viewed the conference call as a chance to communicate directly with the investors in his company. Unsaid was that the focus was not on the Wall Street folks whod later ask questions.

Then Wynn told those on the call that those wondering how competition in Macau would develop might want to think about the evolution of the Las Vegas Strip.

"Its not about whos bigger," Wynn said. "If youre looking for male enhancement, call the 800 number."

Those who have built the biggest places on the Strip have not always built the most profitable resorts, he said. "Size doesnt matter. Quality determines more of the outcome in a highly competitive market. The public has a far more discriminating palate than we give them credit for."

Wynn also warned that pending openings in Macau, including the giant Venetian Macau, will tell a lot about the future of the market.

Other executives chimed in to give Wynn information when he asked for it, including the top bosses at Wynn Macau, participating by phone from Asia in the wee hours of the morning.

When the time came for the Wall Streeters to pose their questions, most offered congratulations on the strong quarter then asked Wynn when he planned some new phase of development. Redeveloping the Wynn Las Vegas golf course? Probably after CityCenter opens, but maintaining a park-like feel between the resorts. Developing Wynn Resorts property on Macaus Cotai Strip? After Wynn can evaluate how the market absorbs the looming capacity increase.

When one analyst got caught up in the minutiae of hold percentages at table games, Wynn told her she was missing the point.

What matters here, and what matters in the casino business, Wynn told her, isnt the luck factor. Its how long people play. If you build a great place, a place people want to be, theyll play longer. And thats why his casinos have always done so well, he said.

After the last call was finished, Wynn thanked his team and returned to his office, saying he wanted to call one of his biggest investors, a longtime friend. And maybe to call the analyst he had chided and explain himself again, to make sure she understood his point.

The conference call took less than an hour, but it was informative and interesting. If I dont get to attend another Wynn conference call, or a call by one of his competitors, Ill know how theyre organized and presented.

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