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Tycoon's Gaming Losses May Give MGM a Boost

September 06, 2000|Reuters

One famous man's reportedly huge losses at the gaming tables in Las Vegas are giving an unexpected boost to shareholders of casino giant MGM Mirage.

MGM Mirage isn't talking, but reports that Australia's richest man, media tycoon Kerry Packer, supposedly lost $20 million in July while gambling at the company's Bellagio casino had some Wall Street analysts crowing that MGM Mirage has hit a jackpot of its own.

The stock (MGG) jumped $1.44 to $35.69 on the New York Stock Exchange on Tuesday.

Packer's gambling spree has provoked a heated debate in Australia--with some politicians saying that if Packer has so much money to blow on gambling, he ought to pay more taxes.

Packer has admitted losing money, but said the amount was far less than $20 million.

PaineWebber analyst Robin Farley said the reports, if true, could provide a boost for MGM Mirage. "We estimate that this large win for the [Bellagio] could add 5 cents to 7 cents to MGM Mirage's [third-quarter earnings per share]," she wrote.

Despite the windfall, Farley said she is holding back from revising her earnings estimates for the company. "I'm not going to run out and change numbers," she said. "They may have lost a ton to someone who came in two weeks later."

Jeffrey Logsdon, analyst at W.R. Hambrecht & Co., said he recently upped his third-quarter earnings estimate for MGM Mirage to 38 cents a share from 32 cents. "That was based on the win percentage at the property, the win percentage in the high-end business and the high demand for rooms," he said.

Logsdon said he was aware of the news involving Packer, but declined to cite the media mogul's reported losses as the reason for raising his estimate.

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