Majestic Research

Reuters

MGM Mirage Profit Rises, but Outlook Disappoints

Published: August 03, 2006

NEW YORK, Aug 3 (Reuters) - MGM Mirage Inc. , the world’s No. 2 casino operator, reported better-than-expected quarterly profit on Thursday, boosted by capital investments and results from newly acquired properties.

But MGM Mirage shares fell 6 percent as the company forecast disappointing third-quarter earnings, leading to fears about business in Las Vegas as the economy slows and consumers cut spending, an analyst said.

“Overall, in the second quarter, we saw weakness in the mass market and some strength in the high end,” Majestic Research analyst Matthew Jacob said. “Across the board, earnings were mostly disappointing for casino companies.”

Shares of Las Vegas Sands Corp. , which reported results on Wednesday, were down 6.5 percent, while Wynn Resorts Ltd. was off 2 percent.

MGM Mirage said net income rose 4 percent, to $146.4 million, or 50 cents a share, from $141.2 million, or 48 cents a share, a year earlier.

Excluding certain pre-opening, start-up and transaction expenses, earnings were 56 cents per share, 3 cents better than the average forecast of analysts polled by Reuters Estimates.

Las Vegas-based MGM Mirage said profit benefited from a full quarter of results from Mandalay Resort Group properties, which was acquired in April 2005.

MGM Mirage said net revenue rose 9 percent to $1.9 billion, in line with analysts’ expectations.

Gaming revenue at casinos open at least a year rose 5 percent, helped by strong sales from slot machines and high-end table games as well as a higher win percentage at table games.

Net revenue at the company’s Las Vegas Strip resorts increased to $1.56 billion from $1.36 billion.

Same-store revenue per available room, a key measure of hotel performance, rose 3 percent at the Las Vegas Strip properties.

The company said it expects earnings of 40 cents per share in the third quarter, compared with analysts’ estimates of 42 cents.

MGM shares were down $2.30 at $35.70 in early New York Stock Exchange trade.