MGM Resorts loss narrows and shares soar 11 pct

AP News
Posted: May 04, 2011 6:43 PM
MGM Resorts loss narrows and shares soar 11 pct

Casino operator MGM Resorts International said Wednesday that it lost slightly less money in this year's first quarter than last year's and its overall revenue rose slightly, even with a 5 percent drop in gambling revenue.

The news sent its shares soaring.

MGM Resorts said its overall revenue rose 3 percent to $1.5 billion as room prices and occupancy rates increased and its convention business improved. Most of MGM Resorts' revenue _ almost 65 percent _ comes not from gambling but from food, drinks, entertainment, retail and its hotel rooms.

The company reported a loss of $89.9 million for the period that ended March 31, compared with $96.7 million a year earlier. That's a loss of 18 cents per share, compared with 22 cents per share a year earlier, for the Las Vegas company in which billionaire Kirk Kerkorian is a major investor.

Excluding one-time items, MGM Resorts said its loss was 16 cents per share, beating the average forecast from analysts polled by FactSet for an adjusted loss of 19 cents per share. Analysts expected revenue of $1.51 billion.

MGM Resorts CEO Jim Murren said there were signs that customers were willing to spend more in its casinos.

"We've got a lot more work to do, but we're off to a good start here this year," Murren said.

Murren told The Associated Press that he expected customers visits to keep increasing, and he said the company will keep its costs in check, which will help its bottom line.

"We are off to a better start here than we had predicted but I do believe it's going to be an extended-year recovery _ not an aggressive, V-shaped recovery," Murren said. "I believe, though, that the macroeconomics are on our side."

MGM Resorts' shares rose 10.3 percent, or $1.33, to close at $14.22 Wednesday.

"We would categorize this morning's result as solid," analyst Carlo Santarelli of Wells Fargo Securities told investors. "We think these results do nothing to upset or disturb the longer-term MGM recovery thesis."

Gambling revenue dropped 5 percent to $582.3 million largely due to a drop in the company's hold percentage _ the share that it won of the money customers bet on table games.

The company said its hold percentage on table games including blackjack, baccarat and craps fell below 19 percent, the low end of what it expects. Last year, the figure was about 21 percent, about the average of what Resorts expects.

Chief Financial Officer Dan D'Arrigo said company officials couldn't explain the drop with a difference in the way its gamblers were behaving.

"We looked at the length of play; that does not look like that's been impacted," D'Arrigo said. "It's purely just a run of bad luck."

Murren said events like Chinese New Year and New Year's Eve attract more high rollers to the company's casinos, and their presence makes its gambling revenue waver more than during the rest of the year.

"That type of activity typically happens in the fourth and first quarter, thus leading to more volatility," Murren said.

Revenue from slots increased 1 percent.

The quarter's results included a loss of 2 cents per share on retiring some debt tied to CityCenter, the company's massive joint venture with Dubai World on the Las Vegas Strip.

The company improved its revenues in each of the rest of its segments besides reimbursed costs.

Room revenue increased 13 percent to, $368.3 million, the company said. Revenue per available room, a key metric for hoteliers, improved 16 percent on the Las Vegas Strip.

In Macau, where MGM Resorts shares in a joint venture with Pansy Ho, the company said its share or operating income improved to $62 million compared with $26 million during the same quarter one year ago.

MGM Resorts said it had $12.3 billion in debt as of March 31 and $431.3 million in cash.


Oskar Garcia can be reached at