Tuesday, August 04, 2009

MGM Mirage posts loss, but revenue tops estimates

ATLANTA (Reuters) – MGM Mirage posted a second-quarter loss on Monday as revenue fell and it discounted hotel rooms in a bid to attract conventioneers to its Las Vegas resorts, but its shares gained nearly 3 percent as revenue was better than expected.

The No. 2 casino operator, whose largest shareholder is billionaire Kirk Kerkorian, reported a net loss of $212.6 million, or 60 cents a diluted share, compared with year-earlier net income of $113.1 million, or 40 cents a share.

The results included a cash impairment charge of 34 cents a share from an investment in a convertible note, and other special items.

Excluding items, the loss came to 12 cents a share, while analysts on average had expected a loss of 9 cents, according to Reuters Estimates.

Revenue, adjusting for promotional allowances, fell 21 percent to $1.49 billion, compared with $1.48 billion forecast by analysts.

Susquehanna Financial Group analyst Robert LaFleur said MGM had done a "good job" controlling expenses in the quarter.

"It was from our view sort of an in-line quarter," LaFleur said.

MGM, whose holdings include nine Las Vegas Strip casino-hotels, gambling resorts in Mississippi and Michigan, and joint ventures in New Jersey and China's Macau, said $2.65 billion of debt and equity issuances completed in the quarter improved its financial position. It also said it was evaluating other ways to bolster its finances.

The company is looking to further expand in Asia as decreased business travel pressures casinos. It said in June that it was in talks with investors to develop a casino in Taiwan and also was eyeing potential projects in Japan and the Philippines.

But the company faces scrutiny in the United States tied to its joint venture in Macau with partner Pansy Ho.

Last week, the state of New Jersey reopened its review of the gaming license held by MGM and Boyd Gaming Corp's -- a 50-50 venture that operates Atlantic City's Borgata.

The move is tied to issues raised earlier this year by an investigation of the Macau venture. In May, New Jersey's gaming enforcement division issued a report recommending that MGM sever business ties with Ho.

MGM said on Friday that resolution of the New Jersey matter could take a year or more, and it plans to present evidence at a hearing before state gambling authorities.

"I don't think this is going to result in anything near-term," LaFleur said of the New Jersey investigation. "I think we're in the very early stages of a long, drawn-out process."

Shares of MGM were up 20 cents, or 2.8 percent, at $7.43 in morning New York Stock Exchange trading after falling before the market opened. Other casino stocks rose, with market leader Las Vegas Sands up 5.2 percent at $9.84 and Wynn Resorts up 4.5 percent at $53.46.

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