MGM MIRAGE reports record results for fourth quarter

February 26, 2008 6:04 AM
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Despite a pre-announcement indicating that the fourth quarter included some record numbers, MGM MIRAGE Inc. (MGM) saw little enthusiasm for its shares following the fiscal report made last week.

The headlines read, "MGM Mirage Profit Up on CityCenter Gain," referring to an infusion from its development, Dubai World, but the addition of additional funding deflated the actual operating figures that were substantial.

The record fourth quarter results included net revenues of $1.9 billion, a 4% gain over the comparable quarter and net income of $199.1 million or $0.68 per share, after the cash infusion was extracted. In the fourth quarter of 2006, the net income was $201.6 million or $0.69 per share.

The majority of analysts had expected the company to report earnings to be $0.55 per share on revenue of $1.92 billion.

Dubai World closed on its CityCenter joint venture in exchange for $2.96 billion. The partner also purchased 14.2 million shares at a cost of $1.2 billion.

The CityCenter transaction added $2.23 per share to the quarterly earnings.

Terry Lanni, chairman and CEO of MGM MIRAGE, called the Dubai partnership "historic."

"Our future in this year, 2008, and well beyond is very bright, he said emphatically.

He noted that in addition to the Las Vegas project, MGM MIRAGE will develop, manage and operate a $3 billion mixed-use non-gaming complex in Abu Dhabi.

"We are not investing any capital in this project. We will earn fees for managing the development and ongoing operations," he said.

The company also announced its plans for a $4.5-$5 billion destination casino resort in Atlantic City. The project, to be built on the company’s 72-acre site at Renaissance Pointe, will be directed by longtime casino executive Bill Hornbuckle.

As for the immediate future, the company said it remains cautious. "We are definitely seeing the effects of a weakened economy. It’s mostly prominent in markets outside of Las Vegas and to some degree, our mid-market properties in Las Vegas," said Dan D’Arrigo, company’s CFO.

Melco PBL

While part-owner James Packer was spreading his money around Las Vegas, Melco PBL Entertainment Ltd. reported it had narrowed its losses in the fourth quarter, primarily with a boost from its Crown Macau casino resort.

Revenues for the period rose to $179.8 million from last year’s $17.9 million with the quarterly loss coming in at $36.5 million or $0.03 per share. Last year’s loss was $53 million or $0.05 per share.

Packer, son of the late legendary gambler Kerry Packer, announced that his Australian company, Crown Casinos, had purchased small shares in both Station Casinos and Harrah’s Entertainment. In previous announcements, the company said it would acquire Cannery casinos in Las Vegas and several racinos in Canada.

Crown Macau is a property focused on high-end play and leans on a Hong Kong company, A-Max to provide wealthy players.

The company said that with A-Max’ involvement January betting volume is "very positive."

As its next project, Melco PBL is building another high-end facility on the Cotai Strip of Macau called "City of Dreams."

Ameristar Casinos

"Caution" was the warning given by Ameristar Casinos Inc. (ASCA) as it viewed its performance during the first six months of 2008.

Without being specific, the company said it expects the first half of 2008 "will be a period of tough same-store, year-over-year comparisons."

This came on the heels of the announcement that during its fourth quarter the company earned $8.2 million or $0.14 per share compared with the $17.8 million or $0.31 per share it reported a year earlier.

Included in the earnings were charges of $4.9 million $0.08 per share related to impairment loss and pre-opening expenses.

Net revenue rose 24% to $302.8 million from last year’s $244 million.

A number of analysts see Ameristar Casinos as a takeover target, especially since it loss its founder and CEO Craig Nielsen late last year.

Progressive Gaming

Continuing a downward spiral, Progressive Gaming International Corp. (PGIC) reported that its fourth-quarter loss widened.

The company reported a loss of $13.7 million or $0.26 per share compared with a loss last year of $10.2 million or $0.29 per share. The per-share results reflected a nearly 50% increase in the number of shares outstanding during the reporting period.

Excluding early debt retirement costs and other items, loss from continuing operations was $0.06 a share versus a loss of $0.21 per share in 2006.

Operating revenue during the fourth quarter increased 32% to $19.1 million, easily topping last year’s $14.5 million.

For the full year, the company’s loss was $96.4 million or $2.41 per share.