WYNN: PRE-ANNOUNCING THE GOOD STUFF

Wynn Resorts held a spot conference call to outline a cost reduction program that will save the company $75-100MM annually. Salary reductions and hourly cutbacks in Las Vegas will drive the majority of the savings. Management wouldn’t comment specifically on earnings other than to say that there will be a lot of “non-recurring” expenses.

The value added of this call to investors is limited. Why not at least provide some preliminary operating numbers? One explanation could be that they are still working their way through what expenses to classify as non-recurring versus being included in operating EBITDA. Starwood recently reported a quarter with over $350 million in “non-recurring” expenses that will no doubt benefit margins in future periods. WYNN definitely laid the groundwork for some big charges.

Margins are the wild card for Q4 and 2009. We are pretty sure the top line will be well below formal estimates as will true EBITDA. Street consensus revenue estimates of $737MM and $3.50bn for Q4 2008 and full year 2009, respectively, are probably each too high by about 10%. This is not a new call for us. We wrote about a potential earnings shortfall back in our 12/10/08 post, “NOV MACAU MARKET SHARE ANALYSIS”, and again in our 1/9/09 post, “WYNN: IT’S NOT JUST Q4 I’M WORRIED ABOUT”. After last night’s call, our call will now be the consensus call.

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