MGM Mirage (NYSE: MGM) investors face a tough
call. They may look at the same numbers, but draw different
conclusions.
On the one hand, the company took a Las Vegas-sized $956
million pre-tax non-cash charge for its giant
CityCenter project,which is scheduled to open next month.
Last month, MGM warned of a CityCenter-related charge due to
its sharp discountingof prices for its residential
properties.
The CityCenter charge and other one-time items were worth
$1.17 a share, pushing MGM Mirage into a reported
third-quarter loss of $1.70 a share, versus a year-ago profit
of $0.22. Net revenue, excluding promotional allowances,
dropped 14% to $1.5 billion.
On the other hand, third-quarter revenue came in ahead of
Wall Street's forecast by about $60 million. If you strip out
various one-time items, MGM Mirage's non-GAAP earnings of
$0.01 per share beat the Wall Street estimate of a $0.08
loss.
Throw in the news that MGM Mirage and lenders had agreed
to amend its credit facility to provide more flexibility, and
you have the elements, at least in early trading, for a
higher stock price on Thursday.
A still-uncertain environment
When measured against big market-cap peers like
Las Vegas Sands (NYSE: LVS) and
Wynn Resorts (NYSE: WYNN), MGM Mirage relies
more on Las Vegas Strip casinos and has a smaller investment
in Macau, although it does have
a joint venturewith a China-based company for one Macau
casino.
It's no secret that Las Vegas Sands and Wynn Resorts
rely moreon Macau than on Las Vegas, but
the questionfor them and  MGM alike is: When
does the bleeding stop in Las Vegas?
In their latest third-quarter reports, Las Vegas Sands and
Wynn Resorts reported revenue declines in Vegas, although
Sheldon Adelson,the chairman and CEO of Las Vegas Sands,
said group bookings for 2010 had already exceeded what it
expects for all of 2009. Continued... |