The story says it all - at least some of the doom and gloom is true enough to scale back.
Thanks to Brian and Detroit for pointing this out.
Categories: Business of Gaming, MGM Resorts International
In the expanded story in today's RJ, Murren is backing away from a connection between the job cuts and the economy:
"This is part of a companywide program that we actually began in September," Murren said. "The fact of the matter is that our business, week to week, is improving. This was something, irrespective of the economy, that we needed to do."
However, room rates are reported to be 19% lower than last year:
"On the Strip, average daily room rates are down as much as 19 percent from a year ago. In a report to investors on Monday, Bear Stearns gaming analyst Joe Greff, who surveyed most of the major Strip resorts for room prices, said any near term recovery is not on the horizon."
Saving $75 million, huh? So if they'd done this a year earlier, '07 profit would have been $1.66 billion, instead of having to scrape by on a mere $1.58 billion.
Does anyone on here take MGM Mirage at their word that this is not because of the economic situation? I think that strains credibility for them to say that.
As soon as Alan Feldman issued his first statement on the economic downturn, I knew Lanni or Murren would "clarify" the situation:
Thanks for the link Detroit, a Very good article�
While I would like to look on the positive side, and previous acts by Terry Lanni - I am thinking where any MGM employee called up for Active Duty gets their Full Pay, including estimated tips, while on Military Leave, it has been 7 and 4 years respectively since Mirage and Mandalay were bought out, you would hope that they would have taken care of any duplicity by now.
Any Comments on what Steve Wynn had to say about layoffs, especially given past comments about how he treats his staff?
The latest Fed "Beige Book" shows strength in tourism, a bright spot in an otherwise-gloomy assessment of the economy. Casino stocks have been pummeled of late, but I do have to wonder if there might be an upside surprise here. Here in the OC, South Coast Plaza continues to attract lots of overseas visitors shopping for bargains, so its reasonable to suspect many foreigners will be lured to Vegas, even as Americans sit at home.
SD - I have to agree. The gaming stocks have been sold off way too much. MGM at $49 is just really crazy. Actually Wynn has held up better than any of them. I know the city will slowdown somewhat this year, but seeing these stocks, some of which, have falled over 50% now, is just stupid. You would think we're headed into the great depression, the way the market has priced some of these stocks. I am just shocked, I have to think there is some serious money to be made on these stocks over the next 12-18 months, if anyone has any money left to buy stock with.
I think it's because of management mindset. The desire to, as Wynn has said once, turn everything into a cash register has resulted in a squeeze on customers. Comps are down in all markets, and in Vegas more things are getting more expensive and the value isn't there since every arm of the octopus (food, entertainment, gaming, resort, spa, etc) has been told by the mothership that it must be a successful venture. Subsidizing for a greater customer experience has been completely forgotten about, and as gaming conditions get worse, the entire town turns into a big fleece job.
Oddly, Wynn seems to do less of this shakedown than the others do. Maybe it's because prices are already high, but I feel Wynn's product delivers in line with the prices it charges. Problem for me is, the product is more luxury than I want nor can afford.
Very odd that Wynn is the only guy so far to say the future is less than shining and saw stockholders fly away. He probably knew that was going to happen, and the way he does business in the long run he doesn't want stockholders anyway. But the old truism was that Steve Wynn existed in his own little world that was far departed from both the other barons and the realities of the market, and so far it seems his company is the only one that sees reality, except maybe Sands (though if I were Sheldon, I'd see CES griping about the costs of things and start cutting deals to bite into the mindshare of both the LVCVA and the other hotels at the same time.)
The Greek-tragic quality of Steve Wynn (and he'd be a great dramatic protagonist) is that you can't have the brilliance without the idiosyncrasies -- which are anathema to Wall Street, unfortunately. The latter sets little store by the fable of the tortoise and the hare, putting its money on the hare every time. It was shameful that, when Wynn said the obvious truth, he was punished with a sell-off.
And you're right that Sheldon might want to see the handwriting on the wall vis-a-vis conventions. Unfortunately, he seems bent on forcing the LVCVA to raise its rates (through a spate of ballot initiatives) rather than consider lowering his own.
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