MGM Mirage earnings hurt by slow economy

18.07.2003, Lesen Sie hier den Bericht über «MGM Mirage earnings hurt by slow economy».

Second-quarter profit dipped 47 percent at MGM MIRAGE as revenue increases were overshadowed by escalating costs and the war in Iraq, the casino-resort operator said today.

And MGM MIRAGE today said it expects to earn about 30 cents this quarter, or about 9 cents below what Wall Street analysts had forecast. The company also has decided not to issue a quarterly dividend, executives said.

The disappointing news sent shares tumbling by nearly $2 before the New York Stock Exchange halted trading on the stock.

The exchange halted trading because those two news items hadn't been included in the company's earnings press release today, MGM MIRAGE spokeswoman Yvette Monet said. The stock was expected to resume trading later today once the company issues a second news release on the items, she said.

The company reported second-quarter earnings of $53.8 million, or 35 cents per share, compared to $101.9 million, or 63 cents, in the same quarter of 2002.

Excluding one-time charges such as discontinued operations from the sale of the company's Golden Nugget properties and a fee received from the buyout of a casino management agreement in South Africa, the company earned $68.3 million, or 45 cents per share. That compares to $88.5 million, or 55 cents per share in the second quarter of last year.

Analysts expected the company to earn an average of 35 cents per share after the adjustments.

Business trends have grown choppy and difficult to predict, with travelers making plans at the last minute, executives said today.

The company also is facing higher costs in the form of wage increases for Culinary Union- represented workers, gaming tax increases in Nevada and New Jersey and some disruption of business when it begins a room renovation project at the Bellagio in the coming weeks, executives said.

Moreover, the company's convention business is flat to slightly down for the quarter due to fewer bookings of larger groups, they said. Trends have been hard to predict this quarter, though signs so far appear "encouraging," Chief Financial Officer Jim Murren said.

The company is well-poised to capture business once economic trends improve, Chief Executive Officer Terry Lanni said.

"If high-end customers do step up their activity, which we expect they will, we expect them to come to our properties first," he said.

Revenue increased 3 percent, to $985 million. Returns were boosted by higher volumes of hotel customers and a higher mix of leisure and casino guests than convention customers, which helped company casinos, executives said. Casino revenue jumped 4 percent, to $518.1 million, helped by higher slot revenue at several properties including Bellagio and New York-New York. Non-casino revenue fell 1 percent, to $467.2 million.

Cash flow dropped 5 percent, to $310.7 million.

Better-than-expected results at Bellagio, MGM Grand in Detroit and the Beau Rivage casino in Mississippi offset weaker results at other Strip properties by about $10 million, or 4 cents per share, Lehman Brothers casino analyst Joyce Minor wrote in a research note to investors today.

Table game volumes, which have been soft over the past few quarters, were up 3 percent and the percentage of bets won from gamblers was within a normal range, Fulcrum Global Partners analyst Joe Greff wrote to investors today. "This trend bodes well for high-end play," Greff said.

"It looks as if MGM gaming revenues well outperformed the Strip" in the second quarter, Minor wrote.

In explaining the decision not to issue a dividend, Lanni said the company's board of directors has determined that share repurchases are a more attractive method of returning value to shareholders.

The company also anticipates using extra cash to reduce debt, reinvest in its best resorts and earmark funds for potential investment opportunities in the United States and abroad, he said.

The news comes a few weeks after competitor Mandalay Resort Group decided to issue its first quarterly dividend -- amounting to 23 cents per share. Analysts applauded the move and predicted other cash-rich companies like MGM MIRAGE could follow suit. Dividends invite a new class of income- conscious investors to casino stocks and make investors more comfortable with companies' cash flow forecasts, they said.

Lanni said the company's recently-opened Borgata casino in Atlantic City -- a joint venture with Boyd Gaming Corp. -- is a "category killer" that is expected to boost returns. The company also is anticipating potential expansion opportunities such as adding slots at racetracks in the United States and building or operating casinos overseas in Asia, the United Kingdom and Europe.

Über The Mirage (geschlossen per 17.7.2024):

The Mirage war ein Hotel/Casino in Las Vegas, USA. Das Hotel wurde im November 1989 als erstes Megaresort in Las Vegas eröffnet.

Im Hotel gab es eine grosse tropische Pool-Landschaft sowie 11 Restaurants, darunter das Restaurant 'Renoir', das mit Originalgemälden von Renoir dekoriert war. Auf über 30 Etagen waren 3044 Zimmer untergebracht. Mit Einbruch der Dämmerung fand vor dem Hotel alle 30 Minuten ein künstlicher Vulkanausbruch statt.

Im Mirage konnten die weissen Tiger und Löwen sowie die Delfine von Siegfried & Roy in ihrem Habitat besichtigt werden.

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