MGM Mirage loses $750M as CityCenter's value drops

By OSKAR GARCIA Associated Press Writer

LAS VEGAS (AP) - MGM Mirage's latest casino project isn't open yet, but a drop in the $8.5 billion complex's value combined with falling revenue companywide to push the casino operator into the red in its third quarter, the company said Thursday.

The company, in which billionaire Kirk Kerkorian has said he may cut his 37 percent stake, lost $750.4 million for the three months that ended Sept. 30 largely because it wrote down the value of the 67-acre CityCenter project it is building with Dubai World on the Las Vegas Strip.

But Jim Murren, MGM Mirage's chairman and chief executive, said CityCenter starting to open in December makes him optimistic for the company. It is prepared to battle for more tourists and convention customers, especially in its home market of Las Vegas, he said.

"In a market that's large, building market share, establishing new relationships, finding new friends (and) reattaching ourselves with our old customers is a way to succeed coming out of a recession," Murren told The Associated Press Thursday. "We are accomplishing that right now."

Murren said its new marketing includes having 50 salespeople in recent week talk with planners who book big conferences and conventions. The company hopes to convince companies to plan meetings again after a year of cancellations.

Murren said the worst of Sin City's woes may be over and predicted CityCenter and other factors will draw 7 percent more visits to Las Vegas next year compared with this year.

Las Vegas Convention and Visitors Authority figures show traffic for the first eight months of the year fell about 6 percent between 2008 and 2009.

MGM Mirage's third-quarter loss of $1.70 per share contrasts with a profit of $61.3 million, or 22 cents per share, in the period a year earlier. The results included charges of $1.72 per share related mostly to CityCenter, which starts opening next month.

Analysts polled by Thomson Reuters, who typically exclude one-time items like charges, expected MGM Mirage to post a loss of 7 cents per share. Excluding one-time items, the company earned 1 cent per share, Chief Financial Officer Dan D'Arrigo said.

Despite MGM Mirage doing better than expected, analyst David Bain of Sterne Agee said he doesn't see visits rising 7 percent next year given flight cuts to Las Vegas and high unemployment in California, where most people who drive to Sin City live.

"If you look at the 6,000-plus rooms being added - all targeting the same demographic - it just doesn't resonate that you're going to be seeing the type of (earnings) gains that the company expects," Bain said.

Bain compared CityCenter to the opening of Wynn Resorts Ltd.'s $2.3 billion Encore Las Vegas casino almost a year ago, which he said added just $20 million in revenue for the company during the first half of 2009.

MGM Mirage's revenue fell 15 percent for the quarter to $1.53 billion from $1.79 billion, but it topped Wall Street's forecast of $1.47 billion.

MGM Mirage's stock gained 42 cents, or 4.5 percent, to close at $9.74. Over the last year, the shares have traded in a range of $1.81 to $16.89.