In early October the markets in stocks related to Macau traded down significantly after the unofficial September market revenue number (55 percent year over year) was released on October 3. While we believe this market volatility will happen in the future on a regular basis, we believe it is undeserved. While the 55 percent increase is not only (in our minds) a healthy percentage increase and near our forecast of 61 percent, expectations on Wall Street of higher numbers in addition to more bullish estimates from various other analysts made for disappointed investors.

    We think investor concerns were way overblown and that the market is continuing to follow a track that will lead it to a total market size of over $15 billion by the end of 2010 (a level that we would expect any investor should be happy with).

    The methodology of our forecast model is capacity driven and we expect that capacity gains will help drive sizable revenue gains, however at a large gap between the two numbers as it will take time for the revenues to catch up with the new property openings. As word of mouth and publicity for the "new Macau" spreads, the customer's interest should pick up. In addition, customers happy with the new product base should readily return with increased visitation.

    Given that, the gap between capacity growth and revenue growth should narrow over time. That gap was 5,937 basis points in 2006, narrowed to 3,650 in the first half of 2007 and we are looking for it to narrow to 3,413 in 2007, 2,940 in 2008, 2,607 in 2009 and 1,378 in 2010. It should be noted that the narrowing of the gap is a function not only of increased visitation, but decreasing percentage increases in capacity additions.