MARKET SAVVY : SAVVY CONFIDENTIAL: A Briefing for Investors : Mirage Executive Denies Report of Dispute

Mirage Resorts Inc.’s stock, already on a losing streak, fell to a 52-week low Tuesday amid reports that Chief Financial Officer Daniel Lee resigned from the third-largest U.S. casino company in a dispute.

Lee said in an interview that he is leaving to start his own company, denying reports of a fallout with Chief Executive Stephen Wynn.

According to an article in the Las Vegas weekly GamingToday, Wynn asked Lee to leave after a dispute over the way the company reports expenses, and that Friday was his last day. The newspaper said Bobby Baldwin will succeed Lee as CFO and continue in his role as CEO of the Bellagio casino resort. “It has nothing to do with expenses. There is no such fight going on between us,” Lee said of Wynn.

Mirage shares fell 69 cents to close at $12.06 on the New York Stock Exchange.

In a recent report titled “Is the Mirage Magic Fading?” Prudential Securities analysts cited several challenges facing the company:

* Mirage’s Mississippi gaming resort Beau Rivage has been “very disappointing” since its March opening, “owing in part to weak marketing efforts.”

Wynn, known for building spectacular casinos that draw millions of tourists to Las Vegas, is trying to improve worker productivity at the $680-million Beau Rivage. But his goal of turning Mississippi’s Gulf Coast into a tourist destination comparable to Vegas is likely to take longer than expected, analysts say.

* In Las Vegas, the Mirage resort is getting “cannibalized” by its sister Bellagio and also losing visitors to newer upscale rivals. Mirage’s Treasure Island has been hurt--at least in the short term--by a $70-million room refurbishment.

And the $1.6-billion Bellagio itself, which opened in October, is losing tourists to Mandalay Resort Group’s Mandalay Bay, which opened in March, and to Las Vegas Sands Inc.’s Venetian, which opened in May.

* Mirage’s capital investment has soared to more than $16 billion since 1997, dragging down the company’s once-stellar returns. The company had earned 22% on capital in 1997, but the figure is expected to fall to 14% this year and rise to just 15% in 2000, according to Prudential, which rates the stock a mildly positive “accumulate.”

Bear, Stearns & Co. analyst Jason Ader said Tuesday that Lee’s departure could further hurt Mirage stock, already down 19% this year.

“Just as Steve Wynn is the most creative person at developing casino hotels, Dan Lee is one of the most talented CFOs,” said Ader, who rates Mirage “neutral”--a low grade by Wall Street standards.

“I know there are people on Wall Street who are concerned about this” executive change, Lee said. “When Wall Street gets to know the other people eligible for the job, I’m sure they’ll be fine.”

Analysts have lowered their estimates for Mirage’s earnings. It’s now expected to earn 76 cents a share for all of 1999, according to First Call Corp. The average estimate in early July was for 89 cents.

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Bad Luck on Wall Street

Mirage Resorts shares are down 19% this year and well off their all-time high, hit in 1997. Monthly closes since January 1995 and latest:

Tuesday: $12.06, down 69 cents

Source: Bridge News