Back to Headlines Print Version Buzz Up Stumble it Tweet it Facebook LinkedIn

UPDATE: MGM Swings To 3Q Loss On $1.17 Billion Write-Down

(Adds additional context, analyst comments and stock movement.)

By A.D. Pruitt and Mike Barris

Of DOW JONES NEWSWIRES

NEW YORK -(Dow Jones)- MGM Mirage (MGM) swung to a third-quarter loss as it took a $1.17 billion write-down on its $8.5 billion CityCenter construction project on the Las Vegas Strip.

Nonetheless, the results topped analysts' expectations and came on the heels of relatively mixed reports from rivals as a slump in tourism and discretionary spending continued to hurt Sin City casinos. Gaming revenue is down 13.6% through August, according to the Las Vegas Convention and Visitors Authority.

In wake of the results, MGM Mirage's shares recently rose 2.7% to $9.57. The stock is down about 31% this year.

Chairman and Chief Executive Jim Murren said results continue to improve from

earlier this year. MGM Mirage swung to a loss of $750.4 million, or $1.70 a share, from year-earlier income of $61.3 million, or 22 cents a share. The write-downs totaled $1.72 a share. Revenue decreased 13% to $1.53 billion.

Analysts surveyed by Thomson Reuters expected an 8-cent loss on revenue of $ 1.48 billion. Casino revenue fell 1%. Room revenue dropped 21%, continuing to be hurt by weakness in convention bookings, while food and beverage declined 13%.

Occupancy at the company's Las Vegas Strip resorts was flat at 95%. The locale's revenue per available room, a lodging-industry benchmark, fell 23%.

"The Las Vegas Strip did a little better than I thought they would do," said Dennis Forst, an analyst at KeyBanc Capital Markets.

MGM Mirage has been completing the biggest-ever project on the Las Vegas Strip that was in doubt of being finished amid a row with CityCenter's joint-venture partner. Recently, condo prices at the CityCenter residential portion were cut 30% in light of slumping real-estate prices in the Las Vegas area.

The write-down came just as MGM Mirage was easing concerns about its ability to remain operational. A stock and bond offering earlier this year led the company to remove a bankruptcy concern statement from a filing in June. As of Sept. 30, MGM Mirage had about $4.3 billion of borrowings outstanding and its cash balance was $897 million.

The same day MGM announced the write-down, shareholder Kirk Kerkorian said he

was looking for new "strategic partnerships or other alternatives" for his 37% stake in MGM. Kerkorian said he wouldn't alter his investment until after CityCenter opens at the end of the year.

Among other casino operators, Las Vegas Sands Corp. (LVS) reported last week a sharply wider third-quarter loss as the operator's Las Vegas operations saw revenue slump 26% amid a tumble in average revenue per room. Wynn Resorts Ltd. ( WYNN), reporting a small increase in revenues, saw net income during the third quarter decrease 33% due to cost increases from a new hotel and tax adjustments.

-By A.D. Pruitt and Mike Barris, Dow Jones Newswires; 212-416-2197; angela.pruitt@dowjones.com

  (END) Dow Jones Newswires
  11-05-091031ET
  Copyright (c) 2009 Dow Jones & Company, Inc.