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California and the West

MGM Mirage's profit doubles

Sales of condominiums and growth in wagering provide a boost to the Las Vegas company.

February 15, 2007|From Bloomberg News

MGM Mirage said Wednesday that fourth-quarter earnings more than doubled as it sold condominiums and gamblers wagered more at its Las Vegas casinos.

Net income rose to $201.6 million, or 69 cents a share, from $97.8 million, or 33 cents, a year earlier. Revenue climbed 11% to $1.85 billion, the Las Vegas-based company said.

Revenue at its 11 Las Vegas Strip properties, which account for 80% of sales, increased 6.4%. The company also had $65 million in profit from more condominium sales at the Signature at MGM Grand, double what some analysts estimated.

"People are waking up to the fact that these guys have tremendous prospects," said Michael Halloran, a research analyst at Allegiant Asset Management in Pittsburgh. "People were starting to be concerned about trends in Vegas and thought things were slowing down, but that turned out not to be the case."

MGM shares rose 14 cents to $70.38. The share price has doubled since the $4.8-billion acquisition of Mandalay Resort Group in April 2005.

MGM had per-share profit of 17 cents in insurance proceeds from damage caused by Hurricane Katrina and expenses of 5 cents for stock compensation and start-up costs.

Excluding such items, MGM earned 52 cents. On that basis, the average estimate of analysts surveyed by Bloomberg was 48 cents.

"Anyway you slice it, they had a great quarter," said Justin Sebastiano, an analyst at San Francisco-based Nollenberger Capital Partners. "They benefited from the strong trends of the Las Vegas Strip as well as on the nongaming side."

MGM had its first full quarter of results from the reopened Beau Rivage in Mississippi since the casino closed after damage caused by Katrina.

The Beau Rivage generated about $106 million in revenue, Chief Financial Officer James Murren said.

Las Vegas Strip casinos reported a record $6.69 billion in revenue in 2006, according to the Nevada Gaming Control Board, an 11% increase. That excludes revenue from hotels, bars and shows. Fourth-quarter Strip revenue was $1.78 billion.

MGM is spending $7 billion in Las Vegas to develop Project CityCenter, a 66-acre complex of hotels, casinos and condominiums on the Strip that is expected to open in 2009.

The company has pre-sold 90%, or 200, of the Mandarin Oriental condominiums at CityCenter with $613 million in sales contracts, the project's president, Robert Baldwin, said.

MGM also owns and runs casinos in Detroit, Mississippi and Illinois and co-owns the Borgata Hotel, Casino & Spa in Atlantic City, N.J., with Boyd Gaming Corp.

Chief Executive Terry Lanni is expanding by building more casinos and other projects, many in joint ventures with condominium or hotel developers.

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