A profitable fourth quarter report by MGM MIRAGE Inc. (MGM) was largely ignored by Wall Street investors last week as the majority of major gaming company shares lost value.
Company officials said MGM MIRAGE benefited from strong business, sales of its Las Vegas condominiums and from insurance payouts for its Katrina damage to show that the fourth quarter profit was more than doubled last year’s profit.
Net income jumped to $201.6 million or $0.69 per share compared to last year’s $97.8 million or $0.33 per share. From continuing operations, the company said, the earnings were $0.68 per share. This dwarfed the $0.48 per share that analysts expected.
Still, analysts noted that when the condo sales dollars and the insurance payments were eliminated from the profit report, MGM MIRAGE’s net earnings were closer to $0.46 per share.
In fact, one analyst said he believed the quarter was "solid but unspectacular."
The MGM share price had surged to a $70-plus level recently following reports that many investors were failing to fully value the real estate the company owned on the Las Vegas Strip. But following the financial report, the share price dropped to the $68 level.
The company is building the $7 billion CityCenter megaresort on the Las Vegas Strip that will include both hotels and condos with completion expected to be in 2009.
Later this month, the company will go before the Nevada Gaming Control Board seeking approval of its planned Macau megaresort that will be a joint venture with Pansy Ho, daughter of controversial Macau gaming tycoon Stanley Ho. It will be called MGM Grand Paradise. And, even before receiving the approval, the company said it is in discussions with the Macau government about building a second major resort.
Also the company has joined with the Mashantucket Pequot Nation, operators of Foxwoods Resort in Connecticut, in forming a development company for future gaming projects.
MGM MIRAGE also has signed agreements for non-gaming developments with Mubadala Development Company of Abu Dhabi, U.A.E., and the Diaoyutal State Guesthouse in Beijing, People’s Republic of China.
And last week, the company announced a plan to form a development firm that will work on the company’s 180 acres in Jean, Nevada.