MGM reports strong results from casino

Tuesday, Sept. 28, 1999 | 10:47 a.m.

MGM Grand Inc. of Las Vegas is earning more than it expected from its new temporary casino in Detroit, Chief Financial Officer James Murren told the Banc of America Securities Investment Conference in San Francisco.

MGM Grand's $208 million temporary casino is the first of three to open in Detroit while the three casino groups build permanent resorts there.

About 20,000 people gamble at MGM Grand Detroit every day, double what the company expected, Murren said. MGM Grand now believes all the Detroit casinos will generate $2 billion in annual revenue, almost double its earlier estimates.

"The best thing we've done this year is open a new property in Detroit," Murren said.

MGM Grand Detroit will generate a better return on investment than its New York-New York hotel-casino on the Las Vegas Strip, he said. That property, opened in January 1997, cost $460 million and generated $130 million in cash flow in its first year. Cash flow is defined as earnings before interest, taxes, depreciation and amortization.

Separately, Lehman Brothers raised its earnings estimates and price target for MGM Grand stock today after a meeting with the casino company's management.

Lehman said it increased its cash-flow estimates for the company's casinos on I-15 at the Nevada-California border, for New York-New York and in Detroit.

MGM stock rose 68.75 cents a share, to $48.25, in early afternoon trading.

Lehman said it increased its quarterly earnings estimate for MGM to 52 cents a share from 41 cents and full-year prediction to $2.05 from $1.85. The firm also boosted its estimate for year 2000 earnings to $2.40 a share from $2.15.