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Casino Operator MGM Resorts Loses $883.5M in 2Q

Written by:
C Costigan
Published on:
Aug/03/2010

LAS VEGAS — (Associated Press) - Casino operator MGM Resorts International lost its standing as the world's second-largest gambling company Tuesday, when it reported lower second-quarter revenue lower than Las Vegas Sands Corp.

Harrah's Entertainment Inc. remains the world's largest casino company, with revenue of $8.91 billion in 2009.

CEO Jim Murren at MGM Resorts, which counts billionaire investor Kirk Kerkorian as its top investor, said Sands and Wynn Resorts Ltd. got a head start in Asia that will keep them in the revenue lead.

But he insisted MGM Resorts uses a different yardstick.

"We've never attempted to be the biggest company in this industry — we've always endeavored to be the best" in terms of quality of properties, management and treatment of shareholders, Murren said.

The two competitors' emphasis on growth in Macau and Singapore — where gambling is growing rapidly again after a lull in 2008 — has insulated them from U.S. consumers' retreat from spending, Murren told The Associated Press.

"That has been able to allow them to grow despite the economic impacts that they're experiencing here in Las Vegas, that we're experiencing as well," Murren said.

For MGM Resorts, too, the Chinese gambling enclave of Macau was a bright spot, producing profit of $40 million.

MGM Resorts reported $1.54 billion in revenue during the second quarter, up 3 percent from a year earlier. But its loss grew to $883.5 with a second major charge reflecting the plunging value of CityCenter, its joint venture with the real estate investment arm of the Dubai government.

Sands, led by billionaire CEO Sheldon Adelson, reported $1.59 billion in revenue for the same three months, including a new casino-resort it opened in Singapore in April.

Harrah's — which runs more than 50 casinos, mostly in the United States and none in Macau — took in almost 33 percent more than MGM Resorts last year and $2.19 billion in revenue during the first quarter this year. It is privately held.

At Wynn, where second-quarter revenue was $1 billion, CEO Steve Wynn is confident of eventually overtaking his two public competitors.

"We're a younger company than the Sands and MGM (Resorts International). And we are a little bit more steady or a little slower. It's the old hare and the turtle story," Wynn said during a conference call. "We're a little bit more like a turtle than a hare."

Murren said MGM Resorts' top priority is improving profits in Las Vegas, the top U.S. gambling market, where it runs more properties than any other company.

"We're not comparing ourselves to other people, we're comparing ourselves to how we are doing in an absolute, and I think we're doing everything we can and I think we're succeeding in terms of becoming a bigger investment for people," Murren said.

MGM Resorts wrote down the value of its half of CityCenter, which cost a total of $8.5 billion to build, after a quarterly analysis showed it was now worth $2.65 billion, Chief Financial Officer Dan D'Arrigo said.

CityCenter hasn't shown an operating profit since opening December.

The charge amounted to $1.64 per share during the three months that ended June 30. The company took a separate charge of $29 million, or 4 cents per share, to reflect the declining value of CityCenter's condominiums, also the second such charge.

The company reported a loss of $2 per share, compared with a loss of $212.6 million, or 60 cents per share, for last year's second quarter.

Without one-time items like the charges, MGM Resorts' loss was 35 cents per share. Analysts, whose forecasts generally exclude one-time items, expected a loss of 24 cents per share on revenue of $1.46 billion.

MGM Resorts said it had $13.3 billion in debt as of June 30 and $570 million of invested cash.

Shares of MGM Resorts rose 7 cents, less than 1 percent, to $11.34 in afternoon trading Tuesday.

Business/Financial News

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