MGM's luck turns sour for quarter

      Net income and casino revenue were down at the MGM Grand Inc. for the first quarter of the year, according to the company's quarterly report released Thursday.
      But the January opening of MGM's New York-New York joint venture helped spur a 16 percent increase in the company's stock earnings for the quarter, according to a company executive.
      "We played unlucky. It was just a question of luck," MGM Grand President Alex Yemenidjian said. "Certainly, you can't look at one particular quarter and make a trend out of it."
      On the up side:
     --MGM's earnings per share for the quarter increased to 51 cents from 44 cents, when compared with the same period in 1996, according to the report.
     --The company reported record cash flow of $68.5 million for the period, compared with $65.8 million for the same three months a year earlier.
      "I think it's the fact that we have the best entertainment in Las Vegas, a great management team," Yemenidjian said. "We are the net recipients of traffic created at New York-New York, and it shows in our numbers."
      On the downside:
     --Net income fell to $30.2 million from $34.5 million.
     --Casino revenue fell 17 percent to $107.1 million from $128.9 million.
      "People are concerned about Las Vegas," said Oppenheimer & Co. Inc. gaming analyst Bailey Dalton. "There's a perception these properties are going to have a tough time."
      Yemenidjian attributed the casino revenue decline to baccarat losses, flat slot play and the lack of a Mike Tyson heavyweight bout that added millions of dollars of casino, hotel, and food and beverage earnings in the first quarter of 1996.
      MGM Grand's quarterly report was delivered amid a slumping market for casino industry stocks, which have lost about 40 percent of their value since June on the Chicago Board Options Exchange index of 15 gaming stocks.
      MGM Grand stock was down 88 cents a share Thursday to close at $33.25 on the New York Stock Exchange. The stock was trading at $48.75 a share in June.
      Some observers fear the Las Vegas casino and hotel market is overbuilt with the past year's openings of New York-New York, The Orleans, Monte Carlo and Stratosphere, and the expansion of Circus-Circus, Luxor and Rio.
      The MGM numbers left at least one gaming industry observer questioning the company's explanation for its slump in net income and casino revenue.
      "I've got some sense of what's going on there, but I can't prove it," said Dave Ehlers, a Las Vegas investment adviser. "If MGM Grand wants to say $22 million (in casino losses) is accounted to the Tyson fight and baccarat, I've got no basis to say this is not true. But this is happening in too many of the cases. What is happening here?
      "There is a credibility problem developing between Las Vegas management and Wall Street."
      Ehlers said the declines likely could be attributed to the January opening of New York-New York, which he estimates is drawing 1 million visits weekly.
      Elsewhere Thursday:
      --Station Casinos Inc. reported net revenue of $583.5 million for its fiscal year ended March 31, which was a 20 percent increase over the company's net revenue of $466.9 million recorded in 1996.
      After accounting for pre-opening expenses largely attributed to the January opening of the company's $255 million Station Casino-Kansas City, the company recorded net income of $6.5 million, or 18 cents a share.
      Excluding the pre-opening costs, net income was $28.3 million or 80 cents a share.
      Boulder Station was the company's big winner for the fourth quarter of its fiscal year, recording an 18 percent increase in cash flow to $13.3 million, on net revenue of $37.1 million.
      Station Casinos stock was down 38 cents a share Thursday to close at $8.75 on the New York Stock Exchange.
      --Rio Hotel & Casino Inc. reported a loss of $2.4 million, or 11 cents a share, after deducting $11.2 million in pre-opening expenses for its $25 million Masquerade Village.
      Net income would have been $4.7 million, or 22 cents a share, without the one-time charge, the company's report said.
      Rio stock was down 25 cents a share Thursday to close at $13.75 on the NYSE.