Majestic Research

The San Diego Union-Tribune

MGM Shy of Expected Results: Gaming Revenue Off at Its Vegas Casinos

Published: May 04, 2007

MGM Mirage Inc., the world’s No. 2 casino operator, posted weaker-than-expected quarterly earnings yesterday as gambling revenue fell at its Las Vegas casinos, sending its shares down more than 4 percent.

MGM’s net income in the first quarter rose 17 percent to $168.2 million, or 57 cents per share, from $144 million, or 49 cents per share, a year earlier.

Chief Executive Terry Lanni said MGM’s ability to attract high-end gamblers has suffered now that Wynn Resorts Ltd. and Las Vegas Sands Corp. operate casinos in Macau and are able to cross-market to Asian high-rollers.

“We will probably, quite frankly, continue to be at a disadvantage for the next two quarters,” he said, referring to the planned fourth-quarter opening of MGM’s first casino in the Chinese gambling enclave. MGM has a 50-50 partnership in Macau with Pansy Ho, daughter of Asian gambling tycoon Stanley Ho.

Las Vegas-based MGM said earnings per share from continuing operations were 55 cents, below analyst projections of 63 cents.

Rival Las Vegas Sands late Wednesday also reported disappointing earnings, and its shares fell 5 percent yesterday.

“MGM is seeing weaker results on the Las Vegas Strip at a lot of its mass-market properties,” said Matthew Jacob, an analyst at Majestic Research.

MGM’s quarterly net revenue, which deducts promotional expenses, rose 9 percent to $1.93 billion. Analysts had expected revenue of $1.95 billion.