Investors in two of the major gaming operators in Las Vegas suffered a double whammy last week with the fourth quarter 2009 reports of Las Vegas Sands Corp. (LVS) and MGM MIRAGE Inc. (MGM).
Both failed to meet analysts’ expectations.
Beyond that, bloggers had a field day following the MGM earnings call, even suggesting that the company might have to file for bankruptcy before year end. Reportedly, the company’s long-term debt has risen to $12.98 billion from $12.4 billion.
Not so, said some observers, who felt that such comments were highly premature and failed to take into consideration the many assets MGM has that could generate needed financial resources.
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Still in progress, they note, is a potential initial public offering (IPO) in Hong Kong involving the company’s Macau holdings.
Disappointing, say comments on the various message boards, was the company’s $7 million operating profit for the 15 days Aria operated in December, and the 16% decline in revenue per available room (REVPAR).
Average daily room rate was $111, down from $135. The slowdown in the economy has caused all major casino properties to reduce rates or induce attendance through promotional fares.
Another concern to some analysts was the possibility that CityCenter has become and will continue to cannibalize its other Las Vegas Strip properties. This was discounted by Jim Murren, chairman and CEO of MGM MIRAGE Inc.
Murren said he felt CityCenter is helping to grow the Las Vegas market.
"As a marketing tool for Las Vegas," he said, "what’s better than CityCenter. We’ve had more than a billion media impressions worldwide and it’s gained tremendous awareness."
As for the concern that the company’s other properties are feeling the impact of competition, he said the properties, especially Bellagio, had benefited from additional foot traffic because of CityCenter.
Mandalay Bay, however, has suffered because of a decline in its convention business.
For the quarter that ended on Dec. 31, 2009, the company lost $433.9 million or $0.98 per share compared to the previous year when the loss was $1.15 billion or $4.15 per share. Eliminating the write-down of its land in Atlantic City, the company lost $0.25 per share on revenue of $1.5 billion.
Analysts had expected the company to show a loss of $0.18 per share.
Question? Comment? E-mail me at: Ray Poirier