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Analyst Initiates MGM Mirage, Harrah's Coverage

20 February 2003

NEW YORK – Investment firm Blaylock & Partners, L.P. has initiated coverage on MGM Mirage and Harrah's Entertainment Inc. with `hold' ratings.

The Harrah's rating reflects the belief that the gaming sector could take a hit with the outbreak of war with Iraq, Blaylock analyst Ray Neidl said.

Still, in the event of war, the company is the most attractive gaming stock as a defensive holding because it has the strongest balance sheet in the industry, a well-developed customer marketing system and a solid base of slot players, Neidl said.

The company -- the most geographically diverse in the industry -- also is best positioned to capitalize on the spread of legalized gambling into new areas, he said.

The MGM Mirage rating reflects a conservative growth outlook for Las Vegas, which has been hurt by the economic slowdown, he added.

"We would need comfort that the negative trends in (fourth quarter 2002) are not continuing into 2003 before reconsidering our rating," he said.

Several new projects in the pipeline -- including the opening of the company's joint-venture Borgata resort in summer, a new spa tower at Bellagio by late 2004, another joint-venture to build a condo complex behind MGM Grand and a permanent casino in Detroit -- should propel growth in the long term, he said.

Blaylock, a minority-owned investment firm based in New York City, expects to expand its coverage of the casino industry, analysts said.

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