4th-qtr revs up, but shares continue post-writeoff tumble
MGM shares closed at a new 52-week low for the second consecutive market sesh Monday, with the stock unable to reverse downward momentum of the past few weeks.Shares fell an additional 6¢ to close at $9.25 on Monday amid a modestly positive broader market. Lion watchers have attributed the stock’s sluggish performance in recent years to malaise in the media sector generally, but its latest woes appear more indigenous. The stock hasn’t recovered from market reaction after MGM majority owner Kirk Kerkorian announced the sale of 25 million shares for a tax writeoff (Daily Variety, Jan. 22). That move compounded damage from a previous sell-off after Lion took big midyear writedowns on movie misfires “Rollerball” and “Hart’s War.” The Santa Monica-based company’s recent fourth-quarter earnings were a bit better than expected, Sanders Morris Harris analyst David Miller observed, yet the stock has closed lower in each of the four trading seshes since the financial results were announced. MGM shares were priced at $20 when the stock launched in November 1997. Its historic low since then came Oct. 14, 1998, when shares closed at $8. Stock’s 52-week closing high of $19.40 dates back almost a year to Feb. 13, 2002. It’s historic high was set May 2, 2000, at $30.38. In 2002, Lion execs authorized the repurchase of up to 10 million shares. Move — an acknowledgement of the stock’s low market value — resulted in the $32.7 million buy-back of 2.9 million common shares by year’s end, according to a recent regulatory filing. Further repurchases are expected, though an MGM spokesman declined comment on the matter. “It wouldn’t surprise me to see MGM pull the trigger on buying more shares in the very near future,” Miller said.