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High-end casino action strong for Semua Situs Slot Mpo

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MGM MIRAGE, continuing to defy fears of a slowdown in the Las Vegas gambling industry, today reported a substantial jump in earnings for the second quarter of 2001.

 

The Las Vegas-based casino company, the largest operator of high-end hotel-casinos on the Las Vegas Strip, reported a profit of $76.6 million, or 47 cents per share, for the quarter ending June 30, 2001. That’s up from a net loss of $19 million, or 13 cents per share, in the year-ago quarter — and beat analyst expectations for the quarter by 5 cents per share.

 

Most of that growth came from the Bellagio and the Mirage; the two Strip properties more than offset weaker quarters posted at the New York-New York, the company’s three Primm casinos on the California-Nevada border, the Beau Rivage in Mississippi and the MGM Grand Detroit.

 

“I’ve always been troubled by the fact that we’re painted by the same brush with the rest of the (gaming) industry,” MGM MIRAGE Chairman and Chief Executive Terry Lanni said on a conference call with investors this morning. “As consolidation continues, there is a differentiation that’s taking place … clearly MGM MIRAGE, with its people, its brand and its properties (has) distinguishing factors, and I think that needs to be considered.

 

“This (the merger of MGM Grand and Mirage Resorts) is probably the most successful combination of two large gaming companies in the history of the industry.”

 

The report shows that newer, higher-end properties will continue to perform well, while older properties will suffer, one analyst said.

 

“Las Vegas has held up moderately well, given that the economy has suffered over the past six-plus months,” said gaming analyst Andrew Zarnett of Deutsche Banc Alex. Brown. “As (visitor) volume begins to level out, the inferior properties in inferior locations will suffer.

 

“You can attract a certain group with (low) price, but those people have been affected more so by the (weak) economy than the average MGM MIRAGE customer. Clearly MGM has done a better job of managing their business and, considering the quality of their assets, has been able to take market share on the Las Vegas Strip.”

 

Companies with new, higher-end properties “will continue to see strong results, albeit less robust than we saw earlier this year,” Zarnett said.

 

MGM MIRAGE is the first major casino company to report earnings for the second quarter. Park Place Entertainment Corp. and Station Casinos Inc. follow Wednesday and Venetian owner Las Vegas Sands Inc. will report Thursday.

 

The relatively strong quarter didn’t do much to help MGM MIRAGE’s stock this morning. Caught in a general market-wide sell-off, MGM MIRAGE retreated $1.01 to $29.95.

 

Much of the benefits came from the $6.4 billion buyout of Mirage Resorts Inc., which occurred at the end of May 2000. Revenues were $1.05 billion, up 74 percent, while cash flow was $324.8 million, up 63 percent.

 

But even if Mirage Resorts had been a part of MGM MIRAGE for all of the second quarter of 2000, cash flow would have been up 5 percent in the second quarter of 2001.

 

Looking forward, Mirage Resorts Chief Executive Bobby Baldwin told investors that room bookings appeared “flat to marginally up” at the company’s properties, with business growth expected to be the strongest at the Bellagio. Baldwin attributed the flattening in room rates in part to economic uncertainty.

 

“Bookings are still strong, and (room rates) are seeing modest growth, but far more modest than in previous periods,” Baldwin said. “We’ve had tremendous growth in (room rates) year to year.”

 

Despite beating Semua Situs Slot Mpo earnings estimates, MGM MIRAGE Chief Financial Officer Jim Murren warned analysts this morning that their third-quarter estimates should be reduced from 44 cents per share.

 

“I think that should be more like 40 (cents per share) … the estimates are a little too high on Bellagio,” Murren said. Because of unusually high hold at the property a year ago, Murren suggested investors should expect to see some kind of decline in the Bellagio’s performance in the third quarter.

 

But the Bellagio was the unquestioned star of the second quarter for MGM MIRAGE. The property reported cash flow of $76.3 million, a whopping 38 percent increase over the year-ago quarter.

 

About $10 million to $15 million of that gain came from an unusually high hold percentage at the property’s tables. Still, the resort benefitted from higher table game play, a 7.5 percent increase in average daily room rates, and strong demand for the resort’s “O” Show.

 

The Mirage showed just as strong a performance, reported $47.7 million in cash flow, up 35 percent from the year-ago period. Table game play was up, as were room rates and catering and banquet business; Baldwin attributed this to the Mirage’s new convention center expansion, opened earlier this year.

 

The MGM Grand Las Vegas reported cash flow of $60.1 million, up 7 percent; this was attributed to a big increase in table game play, particularly in baccarat, which offset a slightly below-normal hold percentage. Room revenues also increased 9 percent, while food and beverage revenues were up 11 percent.

 

Elsewhere, growth was more muted. The Treasure Island saw cash flow increase 2 percent to $27.5 million, while cash flow rose 4.5 percent to $9.3 million at the Golden Nugget Las Vegas. MGM MIRAGE’s one downturn in Las Vegas came at the New York-New York, where cash flow fell 8 percent to $23.8 million, as higher energy costs cut into earnings.

 

In contrast to the powerful performance in Las Vegas, MGM MIRAGE’s three Primm casinos, which cater to economy-conscious gamblers, are clearly being hammered. Cash flow there plummeted 45 percent to $11.5 million. A variety of factors, including high gasoline and utility costs and increased competition from California Indian casinos, was blamed.

 

However, “we haven’t seen any further deterioration in that marketplace,” Murren said.

 

In Detroit, cash flow was off 22 percent to $34.1 million; MGM MIRAGE said this was the result of steeply increased competition, and company officials said they were pleased with the property’s performance. Beau Rivage in Biloxi, Miss., saw cash flow decline 4.5 percent to $17.2 million, as renovations at the property cut into business.

 

The company made it clear that it is still looking for new growth opportunities elsewhere. Lanni, for example, joined the conference call from Paris, and said he’d been touring continental Europe and the United Kingdom for potential new casino opportunities.

 

But the most immediate opportunity may come in Rosemont, Ill., where Emerald Casino Inc. owners Donald and Kevin Flynn had hoped to open a new casino. Their attempt was denied by the Illinois Gaming Board in January, and the two men have since been trying to sell a majority stake in the company.

 

It now appears that company may be MGM MIRAGE.

 

“We continue to have a very keen interest in the Chicagoland market,” said John Redmond, chief executive of MGM Grand Resorts. “We are in serious negotiations with the principal shareholders to acquire 52.7 percent (of Emerald) … these negotiations have advanced to the stage where we and Emerald shareholders look forward to meeting with the Illinois Gaming Control Board as the appropriate first step.”

 

Redmond cautioned, however, that no deal has been signed.

 

“Our next step is to visit with regulators, and discuss with them where we stand,” Redmond said. “Beyond that, it would be premature to comment further.”

 

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