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MGM Mirage Profit Rises on Booming Vegas Business

By Reuters
Published | Updated

NEW YORK – Casino operator MGM Mirage (MGG) Tuesday reported higher first-quarter profit, driven by booming business at Las Vegas resorts like the Bellagio and MGM Grand.

Las Vegas-based MGM, which has agreed to buy cross-town rival Mandalay Resort Group (MBG), said net income rose to $111.08 million, or 75 cents a share, from $105.8 million, or 72 cents a share, a year earlier.

Excluding one-time items, the company earned 87 cents a share, beating the average analyst estimate of 75 cents a share, as compiled by Reuters Estimates.

Net revenue per available room rose 15 percent at Las Vegas resorts.

Earnings before interest, taxes, depreciation and amortization rose 16 percent.

Looking ahead, MGM forecast revenue-per-room growth of about 10 percent in the second quarter, driven by conventions and other events. It also said it expects second-quarter earnings, excluding one-time items, of 70 cents to 75 cents a share.

MGM said its forecast excludes any possible impact from the $4.8 billion Mandalay merger, expected to close before the end of June. The forecast also excludes the impact of a proposed 2-for-1 stock split.

Analysts, on average, expect second-quarter earnings of 79 cents a share.

The merger would make MGM the second-largest casino operator in the world after Harrah's Entertainment Inc. (HET), if the rival company's merger with Caesars Entertainment Inc. (CZR)also goes through.

Shares of MGM Mirage rose $2.52, or 3.6 percent, to $72.25 on the New York Stock Exchange.

Separately, MGM Mirage said its joint venture partnership with Pansy Ho — daughter of Asian casino magnate Stanley Ho (search) — had won permission to develop and operate hotel and casino resorts in Macau.

The initial project, to be called MGM Grand Macau, will be located next to a casino resort planned by Wynn Resorts, in an area MGM Mirage says will become the casino "Strip" of Macau.

The project will cost $975 million, including license rights and interest, the company said.

The casino resort is expected to open in 2007, and will be equally owned by MGM Mirage and Ho.

Macau, the only place in China where casinos are legal, has seen an investment and tourism boom since tycoon Stanley Ho's 40-year gaming monopoly lapsed in 2002.