LAS VEGAS (AP) - Saying his 37 percent stake in MGM Mirage should be worth more, billionaire investor Kirk Kerkorian said Tuesday that he may cut his investment in the struggling casino operator.
Kerkorian, 92, MGM Mirage's majority stockholder until this year, said through his investment firm Tracinda Corp. that he is "exploring the possibility of strategic partnerships or other alternatives" for his stake in the Las Vegas-based casino company.
But Tracinda also said there might not be any change.
MGM Mirage had announced minutes earlier on Tuesday that its third-quarter earnings will show a $955 million charge to reflect the falling value of CityCenter, its $8.5 billion joint venture on the Las Vegas Strip.
MGM Mirage said its stake in CityCenter was worth about $2.44 billion as of Sept. 30.
CityCenter had to reevaluate itself after cutting prices on its nearly 2,400 condos this month to parallel a decline in Nevada's real estate market since the units went on sale in January 2007. The 67-acre project is a 50-50 partnership between MGM Mirage and Dubai World, the investment arm of the Persian Gulf state.
A one-and-a-half year slide in Las Vegas gambling revenue also has hurt MGM Mirage and its shares, which closed at $11.80 on Monday, down more than 87 percent from their peak Oct. 23, 2007, when they traded at $92.69.
Tracinda said it would not act until late December, after the casino at CityCenter opens.
An MGM Mirage spokesman declined to comment on Kerkorian's announcement.
"There is substantial unrecognized value in MGM Mirage and CityCenter that is not reflected in the market value of MGM Mirage's stock," Tracinda said in a statement.
Shares of MGM Mirage jumped early to $12.26 one minute after the market opened Tuesday, but soon fell to $11.83.
Analysts and other investors closely watch Kerkorian, who lost his majority holding in MGM Mirage in May when the company issued new stock and he didn't buy enough to maintain the stake.
This isn't the first time Kerkorian has signaled he might change his MGM Mirage stake, but investors are more likely to believe something will happen this time because he let his majority stake slip, BMO Capital Markets analyst Jeffrey Logsdon said in a note to clients.
Kerkorian also referred in 2007 to "substantial unrecognized value" when he tried to buy CityCenter and the Bellagio resort next door from MGM Mirage.
MGM Mirage said it will report charges of about $200 million before taxes on its third-quarter results for its share of the write-down in CityCenter's residential developments, in addition to the $955 million charge to reflect the project's overall drop in value.
"Investors have long expected (and will probably expect further) write-downs of the carrying value of its residential towers at CityCenter," Logsdon said. "We do not expect investors to have a negative reaction to this step."
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