MGM Mirage to post 3rd-quarter earnings Wednesday
Tuesday, Oct. 28, 2008 | 6:23 p.m.
Sun archives
MGM Mirage Inc. is to report its third-quarter financial results before the market opens Wednesday. Below is a summary of key developments and analyst opinion related to the period.
OVERVIEW: Las Vegas-based MGM Mirage is the world's second largest gambling company by revenue, with success tied to developing and operating casino resorts. MGM Mirage owns 17 casinos and has 50 percent shares in four other resorts.
Like other casino companies, MGM Mirage has taken big hits as people traveled and gambled less this year. A decline in air travel and driving traffic to Las Vegas especially affects MGM Mirage, which owns 10 casinos on the Las Vegas Strip, more than any other casino company.
Through August, room rates for the year were down 7.7 percent in Las Vegas compared to the first eight months of 2007, and gambling revenue was down 6.7 percent on the Strip. At the same time, air traffic has dropped 5.7 percent in 2008 compared to the first nine months of 2007, according to airport figures released Monday.
The company is also working on a $9.2 billion casino, retail, hotel and residential complex scheduled to open in late 2009. It is said to be the most expensive private commercial development in U.S. history. The project has taken longer to finance than the company originally wanted, but MGM Mirage has insisted that it will conclude on schedule.
MGM Mirage officials said last week that it is telling employees not to expect performance bonuses at the end of the year, because the company did not expect to meet the profit goals that trigger the bonuses. A spokesman said the bonuses would have totaled "in the millions" of dollars but would not specify an amount or say how many employees would have received them. The company has roughly 64,000 employees.
MGM Mirage reported profits of $113 million in the second quarter this year, nearly 69 percent below its income in the same period last year.
BY THE NUMBERS: Analysts polled by Thomson Reuters expect MGM Mirage to earn 31 cents per share on $1.82 billion in revenues, a 50 percent decrease from last year.
ANALYST TAKE: MGM Mirage's stock has declined as part of the general industry decline and as investors worry about CityCenter financing and the Las Vegas tourism market, but there may be more to come.
Morgan Stanley analyst Celeste Mellet Brown wrote in a recent note to investors: "We believe Las Vegas fundamentals are worse than investors' estimates reflect."
According to Deutsche Bank analyst Bill Lerner, guests are continuing to visit casinos but aren't spending as much.
"The mid- to low-end segment of the business continues to be weak, while the high end is holding up," Lerner said in a recent note.
But KDP Investment Advisors analyst Barbara Cappaert said MGM Mirage is one of the stronger companies in the sector because of its management.
"When the dust clears on the current market, we feel investors will appreciate the assets in MGM's structure as well as the decent asset coverage," Cappaert said.
WHAT'S AHEAD: Investors will be looking for bottom-line effects from revenue dips in Las Vegas and Macau, the Chinese gambling enclave. China recently tightened restrictions on its residents' travel to the island, and Chinese nationals make up more than half the patrons of its casinos.
Investors will want new details on CityCenter, including condominium sales and financing for the project.
Lerner said risks for MGM Mirage are continued economic weakness, increased competition for high-end customers, high exposure to the Las Vegas Strip and weakness in the Asian economy affecting traffic to Macau.
"MGM is subject to development and execution risk with CityCenter under way, as well as a risk of higher cost of capital to move forward with existing or future projects," Lerner said.
STOCK PERFORMANCE: MGM Mirage's stock price has fallen dramatically from its 52-week high of $95.66. The dip sharpened after Sept. 19, when it was at $34.98. Shares fell as low as $8.91 during trading on Tuesday before closing up 28 cents, or 2.8 percent, at $10.33.
Discussion: 1 comment so far…
Post a comment
- Most Read
- Discussed
- Most E-mailed
- Miguel Cotto turns up heat readying for Manny Pacquiao
- Joe Perry: Steven Tyler has quit Aerosmith
- Fontainebleau subcontractors organize to finish project
- Phil Hellmuth breaks down Main Event final table
- Metro officer’s fatal shooting of teen ruled justified
- New Mexico soccer player goes MMA on BYU
- MGM Mirage following Harrah’s lead on marketing conventions
- Judge dismisses suits blaming Las Vegas Sands for stock drop
- Success: UNLV hits mark of $500 million in cash and pledges
- UNLV hoopsters ready for some unfamiliar faces
Blogs
Miech Again
On the road to Long Beach, UNLV hoops style (9 Comments)
The Kats Report
Vocal strain prompts Wayne Brady to call off 'Making It Up' until 2010
The Greene Room
New Mexico soccer player goes MMA on BYU (12 Comments)
Elsewhere
Fontainebleau suit takes aim at Soffer empire (4 Comments)
Mono puts date for Lesnar title defense in question
The Kats Report
Got a question for Wayne Newton? Or a favorite story? Send it over (5 Comments)
Now and Then
Rollie's team beats Isiah's team (4 Comments)
Calendar »
- 7 Sat
- 8 Sun
- 9 Mon
- 10 Tue
- 11 Wed
-
Everclear at the Hard Rock Cafe on the Strip
Hard Rock Cafe on Strip | 9 p.m. to 11:59 p.m.
-
UNLV Rebels vs. Colorado State at Sam Boyd Stadium
Sam Boyd Stadium | 7 p.m. to 10 p.m.
-
Eric Burdon and The Animals at Ovation
Ovation | 8 p.m. to 10 p.m.
-
Anjelah Nicole Johnson at The House of Blues
House of Blues | 8 p.m. to 11 p.m.
-
2009 PBR World Finals at The Thomas and Mack Center
The Thomas & Mack Center
-
Roy Clark at The South Point Showroom
South Point Showroom
-
Dennis Blair at the V Theater
V Theatre inside Miracle Mile Shops
The Sun
Locally owned and independent for more than 50 years.
Technorati











How much revenue will Obama raise while the MGM lays off thousands due to declining profits. Taking money from our employer will make them lay off even more. We need jobs not increased business taxes. The employees are the losers if taxes go up. What good is $500.00 if I lose my job.