Wynn 1Q17 Earnings Call Notes

Stephen Wynn – Chairman of the Board and Chief Executive Officer

Business is good for us

“Okay. You can see the numbers. Business is good for us. We’ve been joining a research and sub activity at the top-end in China. Our hotels there – we’re enjoying the continuing prosperity of Wynn Macau and the steady growth of Wynn Palace pursuant to plans and the expectations we’ve had since the inception of that project.”

Chinese are settling back into old routines

“I have a picture – I have an opinion on that. And of course, it’s just my opinion. But I’ve said in these calls in the past that it would be a mistake to misunderstand the primary underlying driver of the Chinese economy. It is a massive thing and when you say that as I have in the past that we have a very positive and bullish look forward into our long-term position in Macau, at some point the long-term vision and the short-term begin to meld as they are now.

The suppression of the VIP market was something that was the result organically of a process that the administration of President Xi Jinping thought was appropriate for the country, the elimination of corruption. And it had secondary effects on high-end products like shopping, and automobiles, and gaming was part of that. But having made a corrective move in China there comes a point when the corrective move, it sort of finishes.

And although corruption is still a major item in the PRC, the initial impact has softened, because so much of the work that they thought had to be done, was done. And so people begin to return to normal spending habits, and they are not so strongly influenced by public policy issues that involve public officials. So the people are settling back into routines that they’re comfortable with, and that includes going to Macau and buying a new car or shopping at Louis Vuitton.”

Wynn 3Q16 Earnings Call Notes

Wynn Resorts, Limited’s (WYNN) CEO Steve Wynn on Q3 2016 Results

The Beijing government will support employment in Macau

“Well, the central government always supports the financial health, the employment security, and the welfare of the citizens in the special administrative region, and they repeat that, whether it is the Premier or Xi Jinping himself. My visits to Beijing only reinforce that with the people that I have had the privilege of discussing China with. I go there on occasion to broaden my perspective on China because, after all, Macau is part of it.”

Government will always act to protect the job security of the people

“In my conversations with the top level of the Macau government, they definitely want to protect the job security of the people that are engaged, the Macau citizens and everybody else, that are engaged in working at these places. There is a strong preference for protecting the employee base of the industry. When issues that affect them, meaning the employees and the local employees in particular, come up, the government is particularly responsive and on point. When we get to more subtle things that have to do, for example, with smoking, then the matter — the speed of decision slows down.”

GameStop (GME) 2Q16 Earnings Call Notes

GME has diversified into digital, mobile, and collectibles as physical gaming has declined

“If we sit here and reflect as we think about the decline in physical gaming of almost 40% from its peak in 2008 and 2016, our strategy of diversification has paid off… our new growth businesses of digital, mobile and collectibles make GME a very compelling investment for the future as we grow 3% to 5% annually to 2019 as we projected at our Investor Day.” Paul Raines – Chief Executive Officer


Collectibles is a large, fragmented market that presents a growth opportunity

“it’s over $100 billion business. It’s North America. The piece that we’re focused on which is really sort of movies TV, video game, pop culture licensees, is around $11 billion… it’s highly fragmented. There’s no single player that has more than probably 10% or so share in this category. And its split up a bunch of various kinds of players from mass merch especially to retail to online, a lot of one man shops and so on.” Rob Lloyd – Chief Financial Officer


GME closed nine game store and acquired five hundred tech and mobile stores this quarter

“we closed a net of nine video game stores and now have 3,945 in the US and 2,009 internationally. We acquired 507 AT&T branded stores and opened a net of five Technology Brand stores, now have 1,566.” Rob Lloyd – Chief Financial Officer


Tech and mobile segment utilizes GameStop’s core competencies

“Technology Brands has been a deliberate focus on behalf of our leadership team to diversify GameStop’s revenues… Since its inception in October of 2013, Technology Brands has successfully leveraged GameStop’s core competencies in real estate expertise, multiunit management, buy, sell, trade and capital deployment to create one of the largest consumer technology specialty retail chains in America.” Jason Ellis – Senior Vice President of Technology Brands


As publisher, retailer, and digital partner, GME saw high margins on its first video game

“Playing the role of publisher, exclusive physical retailer and digital profit partner, GameStop is also proving a business model where it can invest smartly in new IPs and enjoy higher margins on the sale of these titles. Our pro forma gross margin for Song of the Deep is 63%. Game Trust has a strong lineup of games in development with innovative developers… These and future unannounced partnerships will continue to establish Game Trust as a leading disrupter in the $1 billion plus independent game market.” Tony Bartel – Chief Operating Officer

Activision Blizzard (ATVI) 2Q16 Earnings Call Notes

The rise of esports feeds into ATVI’s model of strong franchises capable of retaining audiences year after year

“Our esports and film and TV initiatives are not only a driver of audience expansion, but drive deeper engagement which will lead to longer franchise lives with greater profitability. First, on esports. Last year, BlizzCon had its highest livestream viewership ever with over 10 million people around the world tuning in, higher than the viewership for this year’s NBA and MLB All Star games. This November, Blizzard will be hosting its tenth BlizzCon. One of the biggest attractions there will be the culmination of the Road to BlizzCon tournaments with global champions across a number of franchises being crowned, including the champion for the just-announced Overwatch World Cup.” Thomas Tippl – Chief Operating Officer


Pokemon Go’s success in bringing in more players to mobile may present an opportunity to ATVI

“In terms of learnings, Pokémon Go has been very successful in expanding the mobile games audience. They have brought the large Pokémon fan base to mobile. And I believe this is very good for the whole gaming industry. What it has also proven is that when you pair innovation to very strong branded IP, there is a huge potential. And so I think this is actually very good, and it’s a great opportunity for Activision Blizzard on mobile.” Riccardo Zacconi – Chief Executive Officer & Executive Director, King Digital Entertainment Plc


Strides in digital and digital in-game sales bode well for margins

“The first is just the trend that we’re going to continue to see around the shift from retail to digital on full game sales, and that will continue. But even more importantly and a bigger driver as you saw in Q2 is the deeper player investment that we see once we have players inside of our experience and new opportunities to add micro-transactions, advertising, other things into those experiences, which are all really contribution margin and accretive to the overall margin of the company.” Dennis M. Durkin – Chief Financial Officer


Hopes for esports are very high

“Having said that, more people are spectating on video games than ever before. There are more opportunities for spectators than ever before. The live event competitions are providing greater prize pools, greater recognition, greater opportunities for players. And we think that this is one of the areas that’ll present great opportunities for us for the long-term. Getting from here to a place that will allow our franchises to resemble the NFL, the NBA, Major League Baseball, is going to take some time, but I could tell you the best minds of the company, the people who are in this room are all committed to continuing the efforts that we’ve made.” Robert A. Kotick – President, Chief Executive Officer & Director

Activision 2Q16 Earnings Call Notes

Activision Blizzard (ATVI) Robert A. Kotick on Q2 2016 Results

Going to take some time to get esports to NFL or NBA level but we’re committed to it

“Getting from here to a place that will allow our franchises to resemble the NFL, the NBA, Major League Baseball, is going to take some time, but I could tell you the best minds of the company, the people who are in this room are all committed to continuing the efforts that we’ve made. And I think we have a genuine belief that in all of these sports, we’ve been the most successful. I think most of what you see is organized competition started out with Blizzard games a long time ago. And so we have a lot of belief and a lot of expectation that the promise of esports will continue to be something that we will excel at.”

Michael Morhaime – President and Chief Executive Officer of Blizzard Entertainment, Activision Blizzard, Inc.

Video game franchises are now assessed for their esport potential

“I also want to point out that while we had a great start with the game release, we really view this as just the beginning. We think we’ve created a strong character driven universe with big opportunities beyond just the game. We think Overwatch has strong potential as an esport. The recently announced Overwatch World Cup, which will take place at BlizzCon this year is a good first taste of that, but we’ll be talking more about our Overwatch esports plans later in the year. We also look forward to telling more stories about the characters in the world of Overwatch through other media. You’ve seen some of this through the animated shorts and comics, but there’s still more to come.”

Nintendo (NTDOY) North America CEO Reggie Fils-Aime

Nintendo (NTDOY) North America CEO Reggie Fils-Aime talked about how their gaming ecosystem differs from Sony’s Playstation & Microsoft’s X-Box

“For us, it’s not about specs, it’s not about teraflops, it’s not about horsepower of a particular system.  For us,it’s about content.  Nintendo is a content focused company.  We create content that makes people smile.  So we’re focused on bringing our best entertainment to our consoles so whatever Microsoft or Sony are during in terms of talking about new systems, that’s for them to fight out in that red ocean.”





Source: E3 Gaming Conference in LA, http://www.bloomberg.com/news/videos/2016-06-16/full-show-bloomberg-west-06-15

Wynn 1Q16 Earnings Call Notes

Wynn Resorts’ (WYNN) CEO Steve Wynn on Q1 2016 Results

The activity in the stock market is poorly regulated and irresponsibly policed casino

“But when shorts – the exchanges really don’t enforce the rules of make it shorts. So it is an unconscionable manipulation of the stock that occurs. They open up every morning and the high-frequency traders and the shorts have a ball selling shares and then value buyers step in in the afternoon and they cover the shorts. It is regular casino activity. The activity on the stock markets is in my view poorly regulated and irresponsibly policed, especially with regard to short sales. And when it gets out of hand we see a lot of shorts because of China. Because we are such a clear China play we probably had a bigger percentage”

The stock market is more stupid as a gambling game than ever

“So the stock market has got more volatile, more stupid as a gambling game than ever before. And I look at it that way to be honest with you. I have very little respect for the integrity of the trading on the exchange in most stocks. And I have particular disdain for the fact that the SEC has failed to deal with high-frequency traders who are doing nothing more than taking advantage of inside information, a buy or a sell order, because of technology advantages.”

Maurice Wooden

Confident seeing a nice stability in Las Vegas

“So looking forward we continue to see the same type of growth that we had in the first quarter. We anticipate our revenues on the hotel side to be up around 5%. As far as what is on the books, we feel very confident that we have a nice stability in all segments.”

Wynn 4Q15 Earnings Call Notes

Steve Wynn

January in Macau was our best month in a long time

“what is interesting is to say that January in Macau, if I can anticipate some of the questions, was our best month in a long time. Happy to say so. And Chinese New Year is in progress, but early in the week, a little too soon to say, the mass component clearly looks a little stronger than in the past.”

Business is pretty good in the US

“With regard to Las Vegas, January was terrific and Super Bowl and February are off to a roaring start. And between that and President’s weekend, Las Vegas is an apple pie shape up through the 15th which will be Monday. The question in Las Vegas will be how is the last 14 days. But as of now business is pretty good in the United States and holding its own in Macau.”

You can judge the impact of a devaluation by what it did in our economy after QE 1, 2, 3

“Yes. Like any devaluation, if you are buying domestic products, you don’t feel it. If you are buying and you are trading internationally, you do feel it. If you are an exporter and a businessman in China and you are one of our customers, and they are, then devaluing the currency increases your ability to sell your products outside China. So a devaluation, which is of course a methodology of supporting the economy, tends to make our customers have more liquidity. And when we talk about devaluation, QE 1, 2 and 3 took the US dollar down by 18% or 20%. So you can judge what a devalued currency impact has on people by taking a look at what happened right here in the United States where we did precisely that with our federal reserve interventions in QE 1, 2 and 3.”

We have a high end customer in Vegas

” we are holding high and we have got this very privileged kind of patronage. It is one of the advantages — there are advantages and disadvantages of having a high end super quality resort. For example, your average customer tends to be a little wealthier, a little better able to afford more expensive food and wine and hotel rates.”

We focus on the bottom line more than the top line

“We tend to be very fastidious about having all of our games be profitable. We don’t pay so much attention to the top line as we do to the bottom line. So when we evaluate the casino, we don’t evaluate the handle or the Wynn, we evaluate the contribution to EBITDA of our games. And we try to maximize every foot of the casino with one metric in mind, contribution of EBITDA per foot.”

If there’s a recession then we’ll be affected like everyone else

“if there is a recession in America, and it is hard to see why there won’t be if we keep going the way we are, then Las Vegas will ultimately reflect whatever is going on in the rest of the United States. It always has. There’s sometimes been a delay if conventions are booked and things like that, but at the end we always seem to be just like anybody else, part of America and a big reflection of it. So I don’t want you to construe my remarks about a healthy January and a promising February to mean that we’re running counter to anything else you’re seeing. We’re just lucky, that’s all. Just luck, we’re holding high. I don’t want to make too much of it.”

The customers aren’t going to change

“We’re going to do what we have always done. We are going to keep trying to make it better in every way. And that, look, the customers aren’t going to change. There are people who come to Las Vegas and Macau to live big and have fun. And whoever gives them that product consistently and fully wins the race to the top, I guess is the way to put it, or ends up in first position.’

We know who our customers are and we know what they want

“We know who our customers are, we know what they want. And we’re going to try and figure out a better way to give it to them. That’s my ace in the hole. That is my secret.”

Matt Maddox

Chinese macro data is confusing, but it feels like our Macau business has been stabilizing

“Well, we’ve focused on our retail volumes and we are noticing that some of our retailers are starting to stabilize a little bit more compared to last year and the previous quarters. Our hotel occupancies are remaining about the same as they have been and we are seeing some pick up there. And then, Steve, you track all the visitation just like we do from each region. And the visitation also feels like it is stabilizing. So, all the China macro data is confusing for the moment, but what we see in our building and visitation to Macau feels like it has been stabilizing since November. And I think you’d hear that from all the operators.”

Wynn Resorts 3Q15 Earnings Call Notes

Wynn Resorts’ (WYNN) CEO Steve Wynn on Q3 2015 Results

Government policy is making it difficult to plan in Macau

“I mentioned this early in the conversation because it’s become a major issue in Macau as to the impact of government policy on and planning for employment, promotions, hiring and compensation. None of us are really clear on what our environment is going to be like going forward. And it makes planning and adjusting almost a mystical process. And this is the I think probably the major topic of conversation in executive conference rooms as people try and resolve their planning on human resources in the Macau market…I have no idea how many tables we’re going to have. The notion that a person who spent $2.5 billion, I’m talking about Melco now, would not know how many tables are going to have three weeks before they open is preposterous. It’s worthy of comment. ”

Away from Asian effected segments, Las Vegas doing pretty well

“Any change in our earnings in Las Vegas is strictly a reflection of a drop in Asian baccarat business. The rest of the segments in our Las Vegas business are pretty good. Room revenue and stuff like that is healthy. Our convention business is healthy; our food and beverage business is healthy. And we’re very satisfied with Las Vegas. And if anything, the problems in China are causing us to refocus our energies here in America even more intensely.”

Our perception of the present is a function of our expectations of the future

“Everybody in the world including all of a sudden it’s call today, it has been established that our present state of mind, our happiness, our sense of security is fundamentally a function of how we view tomorrow or the future. You tell someone this feeling poorly, suffering from ailment or some discomfort that they are going to be better in three days and they feel better today. You’ll tell someone who is feeling great today that they are going to be awfully sick next week and they get depressed today.”

The Chinese government has gone on a campaign against corruption

“from what we understand, reading the South China Morning Post and other source of information available to us, President Xi discovered that the people of China felt that government officials were corrupt and feathering their own nest. And he thought that that was very malignant for the health of his party and the future of his country and made a decision to correct that and have a campaign against corruption.”

Everyone in China does business with the government because they control everything

“And because of the way China, mainland China works, every businessman in that country dealt in one way or another with a government official because the government controls so many aspects of public policy and business interface.”

So businessmen basically went into hiding in reaction

So businessmen who had nothing to hide as well as those who might have had something to hide all went into the fox holes or into a defensive posture because they didn’t know if the next shoe was going to drop or what the next thing was going to happen. And it is caused across the board, a contraction of all VIP consumer spending at the higher level, which includes Macau.”

My job is really not that different from Xi Jinping’s

“At the end of the day, I am in the same position as this Head of the Macau government and for that matter President Xi Jinping. My job is to create a stable environment in terms of human resources, job security and a better future for people..And the job leaders are to do everything and anything in their power to create a happy and positive outlook to the future for their constituencies.”

Whether your a CEO or head of government you have to have vision

“whether you’re a CEO of a company or you’re the head of a government, you have to have a little bit of ability to look around the corner and see what’s coming ahead of you. And if that’s not good, turn away from it, amend your policies, learn from experience and come to a more sound conclusion.”

Well it wasn’t fun but at least we were honest

“Well, I don’t know that this has been the most satisfying quarterly phone call we’ve ever had but at least it’s the most candid and the most honest one that we could possibly give everybody that is interested in our company. And hopefully, it sheds light; it shares real intelligence and insight on the inevitability of anything that interferes with the long-term health of Macau or Las Vegas for that matter. And I’ve done my best to shine a light on that subject. “

Wynn 2Q15 Earnings Call Notes

Competitors in Macau are very good

“Our fellow operators in Macau are intelligent, they’re extremely well-financed and they’re quick to learn and to accommodate the things that they see in other hotels and to accommodate changes necessitated by their own experience in that market. It’s a very, very sharp place.”

Las Vegas is comfortable

In Las Vegas, we’re enjoying a comfortable business, I think is the right word for it. It’s not an aggressive growth by any means, but we are enjoying non-casino revenue that is acceptable.”

Interesting discussion about the difference between where people buy chips in China vs. the US and how that changes calculation of hold percentage

“In China, and virtually no one buys chips at the cage in America, at least in our experience over the last 40-odd years, and then walks to a table and gambles. In China, they do, in fact, do exactly that. I don’t know whether it’s because they’re using their credit card or they’re cashing in whatever RMBs they have or whatever, but people go to the cage, buy chips, and then circulate around the casino and bring the gaming tokens to the table with them. That means that when we count the boxes, it’s not a measurement truly of the drop or activity in the casino. The handle, it’s referred to in the alternative.”

Vegas is a grind, particularly because of international business

“Las Vegas is, one month is good, and then you see June numbers come out, not so good here on the gaming side. So, Las Vegas is a grind right now, and we think we’re in a good spot in our position in the business. But there’s no accelerated growth going on here, in particular because of the international business.”

Rearranging the floor has meant that we win more money with less games

“I also rearranged the floor in the casino to put our specialty games that are very popular with the public that have a higher margin and I put them in the 100% location and I moved my games with less of a margin to secondary locations. Those changes have worked out favorably to us in the past three weeks, and that kind of re-examination – our slot floor has been redone. We win more money with less games now. These are some of the reasons why we make more money than anybody else in Las Vegas.”

We don’t pay very much attention to our stock price

“our stock can trade at level A or level B. We don’t pay very much attention to our stock price per se, we pay attention to the underlying performance of the company, and those factors associated with performance that are within our control, which is why every week we grind on everything in this building from the use of every square foot of our real estate and our structures, to our plans for the future.”

You’re hearing that the China stock market selloff is going to affect junket collections, but I think it’s just noise

“you’re hearing in the market that all these margin calls that are taking place are going to affect the junkets and their ability to collect the junkets themselves. Some of them were involved in the market. But all of this is in my opinion just short-term noise. And I don’t think it’s going to have any long-term effect.”

Big for the sake of big does not appeal

“As we sit here today, we’ve never had such a opportunity presented to us that we thought was acceptable. That doesn’t mean that at some point in the future such a thing couldn’t happen, or that such an M&A, to use your term, a merger and acquisition, would make sense. But big for the sake of big is not a thing that I subscribe to, as you know, and I’ve said so before. We have a certain kind of a brand. It is flexible and adjustable for sure.”

I’m more interested in tomorrow’s newspaper than yesterday’s

“I’m more interested about tomorrow’s newspaper than yesterday’s newspaper.”

For a price, you can buy anything, but it has to be 2+2=5 or it’s a lot of trouble for nothing

“M&A is the kind of option that of course always exists. I mean for a price you can buy anything, I suppose, and some people find it in their mutual best interests to join up from time to time, because the net result is that two and two equals five. But really it has to be two and two equals five. If two and two equals four, it seems to me a lot of trouble for nothing. I’d rather build our own stuff.”

We’re in the resort business with casinos included

“We build resorts that are much more extravagant and attractive than they would be were it not for the fact that somewhere down the hall there’s a gaming room. But we’re basically in the resort business that has casinos included”