Las Vegas Sands Stock Continues Precipitous Decline

Las Vegas Sands has also been stymied at several turns in attempts to expand its casino base.

Casino stocks have been mired in a slide for six months, putting the belief that casinos are recession-proof severely to the test. Worldwide economic concerns combined with the lack of access to new credit has caused worries throughout the industry. Yey none are plummeting like Las Vegas Sands.

Las Vegas Sands has seen its price per share drop from a 52-week high of almost $150 to a yearly low today of $64.87, edging up to close at $65.03. New yearly lows almost surely await in the days ahead.

Sheldon Adelson's company has been beset by many problems. Moves made by other casino giants have adversely affected the perception of Las Vegas Sands stock, such as the dismissal by MGM Mirage of 400-plus managers recently, which coincided with a drop in Sands share price.

Also disturbing was the precipitous drop in earnings over the fourth quarter, which fell from $113.6 million, or 32 cents a share, to 2007's earnings of $39.9 million, or 11 cents per share. Expansion investment in both Las Vegas and Macau was a major cause of the decline in profit, but investors do not find this a good time to forget the bottom line.

Las Vegas Sands has also been stymied at several turns in attempts to expand its casino base. The much-ballyhooed proposition championed in Massachusetts with Governor Patrick lies dead in the water. The Wyandotte project in Kansas seems unlikely now to fall to Las Vegas Sands. And denial of interest in British casinos seemed a case of sour grapes, after the Brown government inexplicably shot down many proposals to liberalize casino laws and licenses.

Further, a nasty lawsuit personally involving Adelson and the top officers of Sands is ongoing, in which Richard Suen, a businessman from Hong Kong, alleges that Sands owes him millions for helping to arrange a license in Macau. The suit has gone so poorly that Adelson has appeared to contradict his own testimony, and has also testified that he was not making decisions for the company at periods in the past due to illness.

Analysts are still guardedly optimistic about the company's prospects for the future. Macau earnings jumped 62% in the first quarter, and increased not only in VIP gaming, but mass and slot markets as well. Macau is a basket into which Las Vegas Sands has put many eggs, so a return here is vital. 

If Sands can avoid any unforeseen calamaties, and survive the negative media coverage driven by the lawsuit, investors may find LVS to be a major bounce-back stock in the next year.