Image: Las Vegas Sands.

For two years now, casino companies have had to deal with the slowdown in the Asian gaming capital of Macau. As one of the key first movers into Macau, Las Vegas Sands (NYSE:LVS) has a huge interest in the success of the gaming mecca. Coming into Wednesday afternoon's third-quarter financial report, Las Vegas Sands investors were concerned that the headwinds that rival Wynn Resorts (NASDAQ:WYNN) reported in its third-quarter report might carry through to Sands' results, as well.

Yet even though Macau definitely had a negative impact on the company's results, Sands didn't do as badly as some had feared, and that generated some positive sentiment for the stock. Let's look more closely at Las Vegas Sands, and why investors are celebrating its latest news.

Las Vegas Sands still has the Macau blues
The key to understanding Las Vegas Sands' results is that everyone had already expected truly abysmal results. Net revenue fell more than 18%, to $2.89 billion, and that was even worse than the 16% drop in sales that investors were looking to see. On the bottom line, net income fell 23%, to $519.4 million, but even though that worked out to adjusted earnings of $0.66 per share -- down from $0.84 last year -- the figures were $0.02 per share better than the consensus forecast among investors.

Taking a closer look at Las Vegas Sands' results, weakness was widespread. The Sands China unit saw revenue drop 29%, cutting operating earnings by a third, and net income nearly in half. The Venetian Macao resort took a more than $240 million hit to revenue, and operating income dropped almost $100 million, or more than 30%. Sands Cotai Central saw even steeper declines, and the Four Seasons Macao and Sands Macao also saw sales and profits drop in line with the broader Chinese unit's performance.

Conditions were definitely brighter outside of Macau. Marina Bay Sands enjoyed a 2% revenue increase, and operating income climbed by almost 17% despite declines in occupancy rates and revenue per available room. In Las Vegas, revenue also inched higher, although the company took a nearly 10% hit to operating income despite improving hotel statistics. Sands Bethlehem continued the strong performance that investors have seen in previous quarters.

CEO Sheldon Adelson stayed on message with the overall strategy that Las Vegas Sands has taken. "Our convention-based Integrated Resort business model appeals to the broadest set of customers," Adelson said, "generat[ing] the most diversified set of cash flows and deliver[ing] the industry's highest revenue and profit from non-gaming segments while bringing unsurpassed economic and diversification benefits to the regions in which we operate."

Las Vegas Sands looks forward
In addition, Las Vegas Sands still thinks that Macau will be a driver of long-term growth. Adelson mentioned both the opening of the St. Regis tower at Sands Cotai Central in December and the long-awaited opening of the Parisian Macao resort in late 2016 as helping to "attract greater numbers of business and leisure travelers and provide an outstanding and diversified platform for growth in the years ahead."

Despite assertions of the strength of Las Vegas Sands' diversified business model, it's clear that casino operations are still the key to success for the company, as well as Wynn Resorts and other players in the industry. Just looking at the Venetian Macao's numbers, close to 85% of revenue came from the casino, with rooms, food and beverage, mall, retail, and convention-related revenue all adding up to just a small fraction of Sands' overall take. Only in Las Vegas has that dynamic shifted considerably, with room-related revenue actually exceeding casino revenue during the third quarter.

Still, many investors give Sands the inside track against Wynn Resorts and other rivals in adapting to a mass-market audience, and the prospects for some sort of rebound in Macau were likely responsible for the stock's 4% jump in the first couple of hours of after-market trading following the resort company's announcement. Las Vegas Sands still has a long way to go before it can call the Macau crisis over, but it definitely has a strategy for survival that should serve it well, and give shareholders confidence in its long-term prospects.