Is Billionaire James Packer on a Winner in Macau?

Conflicting reports about the fortunes of Melco Crown Entertainment and its City of Dreams mega casino in Macau are giving investors headaches.

Eight months after its launch, Melco Crown Entertainment’s City of Dreams mega-casino is still searching for daylight, sparking rumours that ownership changes may be needed to revive the $2.1 billion Macau resort.

THE parent company of James Packer's casino venture in Macau announced a surge in profits in January on increased market share and says the business is "ramping up nicely". Packer was also reported to be interested in reducing his stake in the venture, something which his partner in the two casinos in Macau described as "total nonsense” according to reports.

Talk has been heating up that Melco Crown, a joint venture between Hong Kong-listed Melco International Development Ltd and Australia's Crown Ltd could be gearing up for a makeover as its flagship property struggles with lacklustre results.

Investors got a rare piece of good news this week as January gambling revenues came in better than expected thanks, in part, to reduced junket commission rates. However, analysts remain cautious about whether a quick turnaround is on the way.

The glimmer of good news was rapidly overshadowed on Wednesday when Moody's downgraded its outlook on Melco Crown to negative from stable, affecting $1.75 billion in debt. With time ticking on Melco Crown to figure out a workable and long lasting turnaround, talk is churning that the company may need a sharp investor with more casino-operating experience to get the business back on track and heading towards the black.

"Our fourth quarter has been a tough quarter as we work through important changes to our business," Melco chief executive Lawrence Ho said. "Going forward into 2010, I believe our business is in its best shape yet." Mr Ho said reports that US casino company Harrah's Entertainment was negotiating to buy a stake in the Macau casinos were "total nonsense".

Shares in Melco International Development rose 3 per cent on the Hong Kong exchange yesterday on the profit news.