MGM Mirage Profit Disappoints
Casino operator MGM Mirage posted lower-than-expected quarterly profit Tuesday amid slower condominium sales and weaker profits in Las Vegas.
The world's second-largest casino operator after Harrah's Entertainment also increased the budgets for two high-profile projects, and its shares slipped 0.5 percent.
MGM , which operates the Bellagio, Mandalay Bay and Circus Circus in Las Vegas, said third-quarter net income had risen 18 percent to $183.9 million, or 62 cents per share, from $156.3 million, or 54 cents per share, a year earlier.
MGM said earnings had benefited from $135 million in insurance recoveries for damage sustained during Hurricane Katrina.
Excluding the insurance gain and other one-time items, the company posted profit of 42 cents per share, below the analysts' average forecast of 50 cents, Reuters Estimates said.
Operating earnings at MGM's Las Vegas Strip properties fell 6 percent to $334 million, as profits from sales of condominiums at the Signature at MGM Grand slumped.
Revenue rose 6 percent to $1.9 billion, boosted by the Beau Rivage, which was open only 33 days in the 2006 third quarter.
Excluding the U.S. Gulf Coast casino, MGM said revenue had risen 2 percent.
Gaming revenue at MGM, which owns and operates 17 casinos, rose 3 percent, but fell 3 percent excluding Beau Rivage.
MGM is developing a number of casinos, including the massive CityCenter project in Las Vegas and a $5 billion casino in Atlantic City, New Jersey.
Earlier this month, it opened the MGM Grand Detroit, and it plans to debut its first property in Macau, China's gambling haven, by the end of the year.
But some of these new projects are costing more than expected. MGM increased its project budget for the MGM Grand Macau to $1.25 billion from $1.1 billion, while the expected costs for CityCenter rose to $7.8 billion from $7.4 billion.
In August, MGM agreed to sell half of the CityCenter development of hotels, condos and retail outlets to state-owned investment firm Dubai World.
Earlier this month, Dubai World bought 14.2 million shares of MGM stock directly from the company for about $1.2 billion, taking its stake up to nearly 5 percent.
MGM shares were down 45 cents at $92.47 in morning New York Stock Exchange trade.