MGG Q4 EPS: $0.41 estimate: $0.35 |
Thursday February 4, 4:12 pm Eastern Time
MGM Grand beats Q4 estimates, shares rise
By Sarah Tippit
LOS ANGELES, Feb 4 (Reuters) - MGM Grand Inc. (NYSE:MGG - news) reported lower
quarterly earnings on Thursday, but still beat Wall Street forecasts on record-breaking revenues, sending the hotel
and gambling company's shares rising on the day.
MGM Grand attributed the robust sales to good luck at its casinos and an emphasis on food and drink sales at its
flagship resort, the MGM Grand hotel in Las Vegas.
Record fourth quarter net revenues of $214.9 million versus $212.6 million a year ago, signified a rebound from a
string of several unlucky quarters at the Las Vegas-based hotel and gambling company.
For the fourth quarter, MGM reported net income of $21.2 million, or 41 cents per diluted share, versus $33.4
million, or 57 cents a diluted share last year. Analysts had expected MGM to earn 35 cents a share in the quarter,
according to investment research firm First Call.
MGM shares rose over $1.00 in early trading on the New York Stock Exchange, and ended the day 94 cents higher at
Executives at the hotel and casino giant said the higher revenues showed that ongoing efforts to upgrade the Las
Vegas resort, the MGM Grand, and expand into other markets would offset competition in the U.S. hotel and casino
''We have dramatically expanded our properties, established important marketing partnerships, embarked on an
aggressive cost containment program and significantly improved the depth of our management team,'' President Alex
Yemenidjian said in a statement.
''The fourth quarter results provide a positive early indicator of the merit of our strategic plan,'' he added.
The face-lift and renovation of the MGM Grand Resort and Casino in Las Vegas is nearly completed, the company
said, with a 29-suite mansion opening in April, and a lion habitat opening in May.
A conference center and upscale '70s themed Studio 54 nightclub, which opened recently, have boosted the
company's beverage and food revenue over 1997's fourth quarter.
However, in its second year MGM Grand's 50 percent-owned New York-New York Hotel and Casino located across
the Las Vegas Strip from the MGM Grand, fell short of the stellar results it reported over the course of last year, the
MGM Grand, which jointly owns the property with Primadonna Resorts Inc., (Nasdaq:PRIM - news) reported $6.9
million in pretax income from New York-New York compared with $9.1 million a year ago.
MGM Grand said it is now focused on closing a merger with Primadonna, expected on March 1, 1999, pending
shareholder approval. If approved, MGM Grand would boost its size and scope by acquiring Primadonna's
50-percent share in New York-New York, as well as its three gambling resorts in Primm, Nev., and two
championship golf courses in nearby California.
MGM Grand said it also plans on opening its newest casino property in Detroit in the third quarter.
Overseas properties reported positive revenues, the company said. The MGM Grand resort in Australia exceeded
expectations with net revenues of $8.9 million compared with $8.5 million last year. In its first full quarter, the
company's third Johannesburg, South Africa casino, a temporary facility, also exceeded expectations, the company
MGM Grand and its partners continue to submit bids for additional casino licenses within the remaining provinces of
the Republic of South Africa, it said. Under such deals, partners provide all project costs, and MGM Grand receives
fees for the development and management of the casinos.