Wednesday, February 17, 2010

MGM Mirage (NYSE: MGM): Q4 Earnings Preview 2009

MGM Mirage (NYSE: MGM), the world's second-largest gambling company by revenue, is scheduled to release its fiscal fourth-quarter 2009 financial results before the opening bell on Thursday, February 18, 2010. Analysts, on average, expect the company to report a loss of 13 cents a share on revenue of $1.46 billion. In the year ago period, the company posted a loss of 11 cents per share on revenue of $1.62 billion.

MGM Mirage, through its subsidiaries, owns and operates casino resorts in the United States. The company's resorts offer gaming, hotel, dining, entertainment, retail, and other resort amenities. It also owns and operates golf courses and a golf club.

In the preceding third quarter, the Las Vegas, Nevada-based company posted a net loss of $750.39 million or $1.70 per share, compared to a net profit of $61.28 million or $0.22 per share in the year-ago quarter. Revenue slipped 9% to $1.53 billion from $1.78 billion last year. Analysts, on average, expected the company to report a loss of $0.08 per share on revenue of $1.47 billion.

Like many gaming companies, the firm's casino operations has been hit hard by the recession, due to lower traffic, shorter stay and decreased spending by the visitors.However, the financial outlook for Las Vegas Sands Corp. has improved amid a rebound in consumer spending and global economic revovery. Recently, Nevada’s Gaming Control Board said that the Las Vegas Strip gambling revenue rose 5.9 percent in December, the second straight monthly gain. Strip proceeds climbed to $502.2 million in December from a year earlier.

Yet another bright spot is Macau's outlook. The company is poised to benefit from more friendly gaming policies from the local government, limited supply of new gaming tables in the near term, and expectation of no further stringent enforcement by the Chinese government over tourist visitations to the enclave support stable growth for the sector's revenues. The casino operator is also expected to get a boost from Chinese New Year celebration. According to Portuguese news agency Lusa, casino revenue in Macau jumped almost 65 percent to a monthly record of 14 billion patacas ($1.75 billion) in January from a year ago, beating the 12.6 billion patacas recorded for October 2009. A new daily record of more than 800 million patacas was also reached in January, Lusa said, citing data from the casino operators.

MGM Mirage's CityCenter resort complex opened its door to the public just before Christmas to critical acclaim. CityCenter, an unprecedented urban metropolis on the Las Vegas Strip, is a joint venture between MGM Mirage and Infinity World Development Corp, a subsidiary of Dubai World.

The firm has taken several steps to improve its financial position. It is seeking amendments to credit agreements that would extend the maturity for a substantial portion of $5.55 billion of senior debt. Recently, MGM Mirage said it was looking to extend the maturities to Feb. 21, 2014, from Oct. 3, 2011, and has asked lenders to approve the change by later this month. In a statement, the company cited "strong initial support" from leading lenders for the proposed accord and said it was working with the rest of its lender syndicate. The company is also planning a Hong Kong IPO that could raise a billion dollars. Meanwhile, according to media reports, MGM Mirage is planning to sell its 50% stake in the Borgata casino resort in Atlantic City, New Jersey. MGM, which partners with Boyd Gaming to manage the Borgata property, is reportedly asking for between $700 million and $850 million for its half.

Shares of the casino operators have spiked ahead of earnings reports. In terms of stock performance, MGM Mirage shares have rallied 130 percent over the past year.

Full Disclosure: None.

Related Earnings Preview

1.) Las Vegas Sands Corp. (NYSE: LVS): Q4 Earnings Preview 2009

2.) Wynn Resorts Ltd. (NASDAQ: WYNN): Q4 Earnings Preview 2009
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