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MGM Mirage on a Roll With 4th-Quarter Report

February 02, 2001|From Times Staff and Wire Services

Casino giant MGM Mirage's earnings report Thursday fueled a surge in its shares and helped boost the gaming sector in general, as investors reassessed how much the business may suffer in a weaker economy.

Las Vegas-based MGM Mirage, formed by the merger of MGM Grand and Mirage Resorts last year, reported fourth-quarter operating earnings of $68 million, or 42 cents per diluted share, compared with $40 million, or 34 cents per share, a year earlier for MGM alone. Revenue rose to $1.1 billion from $421 million.

The company's results met analysts' average per-share estimate, which had been raised from 39 cents after MGM in early January forecast higher operating profit.

Also, MGM said it is comfortable with analysts' earnings estimates for 2001. The stock jumped nearly 10% on Thursday, rising $2.88 to $32.03 on the New York Stock Exchange.

MGM's report showed the company's casinos attracted visitors even as Las Vegas tourism slipped, analysts said. "People go to Las Vegas to see the Bellagio, the MGM Grand and the Mirage," said analyst Jason Ader at brokerage Bear, Stearns & Co., naming three of MGM's premier properties.

At the MGM Grand, the world's largest hotel, casino revenue rose 7% in the fourth quarter, and occupancy of its 5,034 rooms rose 3 percentage points to 92.1%.

"They have an advantage over the other properties. They were potentially taking market share away from the other guys," said David Barteld, an analyst with Wells Fargo Van Kasper, who rates MGM a "buy."

Many gaming-related stocks rose last year, even as most major U.S. stock indexes fell. But shares of MGM Grand, Mandalay Resorts, Park Place Entertainment and other casino giants had been higher at mid-year before tumbling in the fourth quarter on fears that the slowing economy would slash tourism at gambling meccas.

Those fears had been holding back shares of many of the companies early in January. But in recent weeks the group has been rebounding.

One of the hottest gaming-related stocks last year and this year has been Anchor Gaming, which sells gaming machines and also operates some casino properties. The Las Vegas-based company will open the Pala Casino in northern San Diego County this quarter.

Ticker Talk: Weyerhaeuser Co. will extend a $7.1 billion tender for Willamette Industries as part of its hostile takeover bid for the rival forest-products company. Weyerhaeuser's $48-a-share offer, which was scheduled to expire today, will be extended until March 30, the company said. This is the second time that Weyerhaeuser has extended its offer. Willamette reiterated that the offer is too low and recommended that its shareholders not tender their shares. As of Thursday, about 51% of Willamette's outstanding shares had been tendered. . . .

The sharp slowdown in earnings growth at many U.S. companies is translating into fewer dividend increases. A total of 169 companies raised cash dividend payments to shareholders in January, down 8.1% from the 184 companies that raised payouts in January 2000, and down 17.6% from 205 companies in January 1999, Standard & Poor's Corp. said Thursday.

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Bets on the House

Gaming stocks, including casino operators and makers of electronic gaming machines, had a good year in 2000 relative to major market indexes, but this year the group is mixed. A sampling of gaming-related issues:

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Ticker Thurs. close 2000 YTD stock symbol and change change change Anchor Gaming SLOT $52.75, --$0.50 +80% +35% Harrah's Enter. HET 30.89, +1.51 0 +17 MGM Mirage MGG 32.03, +2.88 +12 +14 Mandalay Resorts MBG 22.25, +0.54 +9 +1 Aztar AZR 13.01, +0.86 +19 +1 Intl. Game Tech. IGT 48.39, +0.52 +136 +1 Park Place PPE 11.50, +0.25 --5 --4 S&P 500 1,373.47, +7.46 --10 +4

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Source: Bloomberg News, Times research

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