Majestic Research

Reuters

MGM projects wider-than-expected 1st-qtr loss

By Deena Beasley
Published: April 14, 2010

MGM Mirage (MGM.N) on Wednesday projected a wider-than-expected loss for the first quarter due to weak results in Las Vegas, including the company’s new $8.5 billion CityCenter development.

The news sent shares of the company, one of the largest casino operators on the Las Vegas Strip, down more than 5 percent.

"I think investors were really hoping for more,” after Nevada reported last week that gambling revenue on the Strip rose nearly 33 percent in February from a year earlier, said Matthew Jacob, an analyst at Majestic Research.

MGM estimates it will report a loss of 22 cents per share in the three months ended March 31, but that includes one-time items such as a 21-cent-per-share gain on extinguishment of debt.

Wall Street analysts, according to Thomson Reuters I/B/E/S, had been forecasting a loss of 21 cents per share.

The company said first-quarter revenue would likely be $1.46 billion, roughly in line with the $1.43 billion forecast by analysts.

MGM said operating losses at CityCenter, which opened in December, will total $255 million for the quarter.

Looking only at properties open during both periods, MGM said casino revenue is expected to drop some 5 percent compared to a year earlier.

On the Strip, revenue per available hotel room fell 8 percent from a year earlier, as the extra CityCenter capacity put pressure on room rates at the same time consumer and business demand for travel as waned amid the recession.

The company said its overall operating loss was expected to be about $11 million for the quarter, compared with operating income of $355 million in the same period in 2009.

The casino operator will hold a conference call to discuss its earnings during the week of May 3.

Shares of MGM Mirage, one of the largest casino operators on the Las Vegas strip, slid 5.4 percent to $14.58 after hours, from a regular-session close of $15.41.