‘Windtalkers’ Blows Ill for MGM as Firm Warns of Much Steeper Losses

MGM Inc. on Wednesday warned Wall Street of much steeper losses than expected for the latest quarter and full year, days after its current movie “Windtalkers” became the latest in a string of box-office flops.

The Santa Monica-based film studio now expects its second-quarter loss to widen to 46 cents to 48 cents a share from a loss of 26 cents a share a year earlier. Analysts were expecting a 13-cent loss, on average, according to Thomson First Call.

Given the lack of popularity of “Windtalkers,” MGM nearly doubled its projected loss for the year to a range of 85 cents to 89 cents.

“Windtalkers,” a World War II epic that was to be MGM’s major summer movie, debuted Friday to a paltry $14 million at domestic box offices and landed in the No. 3 spot, crushed by “Scooby-Doo” and “The Bourne Identity.” It cost an estimated $115 million to $120 million to make.

Two box-office bombs last winter, “Rollerball” and “Hart’s War,” led to a first-quarter loss of 37 cents a share.

MGM, whose controlling shareholder is Kirk Kerkorian, has only one more major movie debut this year--the 20th James Bond film, “Die Another Day,” set for release in November.

Meanwhile, MGM continues to exploit its 4,000-title film library to crank out home videos and DVDs, a business that has become a profit generator. The company has said it expects those factors to help it turn around.

“We remain on track to return to profitability in the fourth quarter of this year,” Chief Financial Officer Dan Taylor said Wednesday.

Unlike Hollywood’s other major movie studios, MGM lacks large media outlets such as TV networks, radio stations, cable TV systems and theme parks to help offset the costs of producing and marketing movies.

So one movie flop can deal a severe blow to earnings.

MGM shares fell 35 cents to close at $13.75 on the New York Stock Exchange, before the news was announced.