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MGM Resorts Expected to Report 2nd Quarter 2012 Loss

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Published on:
Aug/06/2012
MGM Resorts Expected to Report 2nd Quarter 2012 Loss

NEW YORK – (Associated Press) - MGM Resorts International is expected to report a quarterly loss on charges related to the dwindling value of some casinos when it releases second-quarter results before the market opens Wednesday.

WHAT TO WATCH FOR: How it's dealing with Americans falling desire to spend. The casino and resort operator, in which billionaire investor Kirk Kerkorian holds a major stake, has extensive operations in both Las Vegas, where it's based, and the Asian gambling mecca of Macau.

MGM still has much of its business in Sin City, unlike its major counterparts Las Vegas Sands Corp. and Wynn Resorts International. Growth there has been stifled as Americans pinched their pennies or stayed home altogether.

But now it has to worry about slowing Asian growth, as well. The rapid growth of Macau, the only place in China where gambling is legal, has offset weakness in Vegas for major players. But the gambling industry is now seeing a slowdown in Macau, too. U.S. casino giants are beginning to report sliding sales in the region.

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Las Vegas Sands Corp., which operates The Venetian and The Palazzo in Las Vegas, said last month that its second-quarter profit tumbled by 35 percent mostly due to lower table winnings in Asia and at home. Wynn Resorts Ltd. said its second-quarter earnings rose from the same quarter last year, which was weighed down by a hefty charge. But revenue fell at its operations in both Las Vegas and Macau.

Still, there might be a bright spot for MGM: Hotel occupancy and rates have held up despite weakness around the globe. Investors are expecting that to hold up MGM's second-quarter revenue.

WHY IT MATTERS: MGM Resorts' results are a strong indicator of the health of the gambling economy in the U.S., and can show how comfortable Americans are parting with disposable income.

WHAT'S EXPECTED: Analysts polled by FactSet expect MGM to post a loss of 15 cents with revenue of $2.35 billion.

LAST YEAR'S QUARTER: Net income of $3.44 billion, or $6.22 per share, on revenue of $1.81 billion.

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