Citing growing softening in its markets, especially toward the end of last month, Gannett today said first-quarter net income and revenue fell sharply -- in line with Wall Street's expectations, however. Net income fell 8.9% from a year ago, to $192 million, or 84 cents a share. Revenue fell 8.4%, to $1.7 billion.The results included a special after-tax gain of $16 million on the sale of land at the company's headquarters in McLean, Va. Without that gain, per-share net income would have been 77 cents vs. 88 cents a year ago. "We faced a very challenging advertising environment as the economy further weakened in the quarter, particularly in the latter half of March," CEO Craig Dubow said in a statement. "We are focused on positioning the company for the future from both a revenue and expense perspective as we navigate the uncertain economic environment."
Dubow and other company officers will talk about the quarter's results in a conference call with analysts at 10 a.m. ET. I hope to listen in, and update my posts later.
Dubow and other company officers will talk about the quarter's results in a conference call with analysts at 10 a.m. ET. I hope to listen in, and update my posts later.
The cost cutting (for profitability) knows no ends. This morning, my Monday copy of The Des Moines Register was delivered in a plastic sleeve that encouraged me to subscribe or place a classified ad with The Charlotte Observer!
ReplyDeleteI think this is taking recycling a bit too far. I wonder if they got a discount on these things ...
Gannett stock is actually up a few cents so far today.
ReplyDeleteBTW; Dubow is featured in an interview in the new Smart Money magazine. Blowing a lot of optimistic smoke about the future. Either he's a true believer or made sure the reporter drank the kool aid before she started asking questions...
Dubow knows it's not the economy. This company was tanking long before anyone was talking about a recession. He's just offering more excuses for the company's shoddy performance. We can read through his words and see what's coming down the line. Get ready for more cuts to the workforce, and to the raises for the remaining low-level staff. Senior editors and above, however, will certainly take generous raises and bonuses on the backs of low-level staffers and shareholders.
ReplyDeleteMeanwhile, photo editors at at least one large daily Gannett paper are now having to submit an item-by-item account of the freelance budget for the past year to justify every dollar spent. It's not looking good for the freelancers -- and the drastically understaffed photo desks that benefit from their work.
Did anyone read the transcript from the Craig and Gracia show presentation to the Wall Street big shots? No wonder Gannett can roll along with little pressure on their performance.... all one analyst came up with is "how you feeling Craig" and then followed with "how's the back"....good grief. I don't remember any of us in GCI at the old "on site" meetings getting any of those cream puff questions.
ReplyDeleteI suspect that Wall Street long ago set low but perhaps realistic expectations for newspaper publishers. Management looks busy (the Information Center model, etc.), while shoveling big dividends at institutional investors. Those investors go along with management's act, because they no longer believe newspaper publishers can ever return to their glory days.
ReplyDeleteWall Street and management know what's going on: Gannett's newspapers, TV stations and other businesses are being rather quickly squeezed down to their most high-value parts -- while less-valued "parts" get bought out, laid off or, now, watch their jobs get offshored.
At some point, expenses will come in line with revenue -- but revenue's got to be the first to plateau. Once that happens, management can reset the strategic plan, to reflect the new-size reality. I have no idea how long this would take.
It is about performance -- right? Yea...right.
ReplyDeleteSome attention has been given to Craig Dubow’s bonuses -- he must have had a really unusual MBO (or whatever the plan is called) for 2007 to receive a cash bonus worth $1.75 million. That’s just less than 150% of his $1.2 million base salary. And he received a bonus of stock and option awards, according to the Proxy Statement, pg26, worth about $4.4 million. That’s a pretty good “match” in 401-K terms. (These stock and option awards were greater than 400% MORE than the 2006 awards.)
From the Gannett Annual Report (AR), the 10-K (K) and the Proxy Statement (PS), Dubow must have had a very “successful” year in the eyes of the Board of Directors and especially the Gannett Compensation Committee (Arthur H. Harper, Marjorie Magner, Duncan M. McFarland (chair) and Karen Hastie Williams).
How do they measure success? The Annual Report says Dubow had to have a “superior performance” in order to receive a bonus. The report says it “reward[s] superior performance” (PS-pg15) after telling the stockholders that the B of Dir/Comp Comm places “a heavy emphasis on pay for performance and that substantial portions of total compensation should be ‘at risk.’” (PS-14)
The shareholders have to wonder how does the Board of Directors/Comp Committee measure “superior performance?”
In 2007, according to the company documents listed above:
1. The year to year stock price was DOWN -- almost 50% (K- p20) More DOWN in 2008. (The latest Gannett 401-K performance report lists the stock in last 3 years as DOWN 26.49%; for 5 years as DOWN 14.9%.)
2. Company income per share of stock DOWN 13.3% (AR-1)
3. Company operating revenues DOWN 5.2% (AR-1)
4. Company operating income DOWN 13.3% (AR-1)
5. Company income from continuing operations DOWN 14.3% (AR-1)
6. Company working capital DOWN 8.2% (AR-1)
7. Company total assets DOWN 2.1% (AR-1)
8. Company operating expenses DOWN 3% -- only 3% -- even with heavy employee cuts, news space reductions and reduced prices and purchases of newsprint plus other cuts. (K-24)
9. Company capital expenses DOWN 11.1% (AR-1)
10. Newspaper circulation “declined in nearly all of our newspaper markets (then cited newspaper industry trends to make DOWN look ok). (K-6)
11. Broadcasting revenues DOWN 8% (K-27)
12. Broadcasting operating income DOWN 17% (K-27)
There was a little good news:
1. Long term debt was DOWN 21.3% (AR-1)
2. Shareholder equity was UP 7.6% (AR-1)
3. Dividends were UP 22 cents per share or 18.3% (AR-1)
Overall, the corporate news could not be much worse. Gannett newspapers have dramatically fewer people producing stories/content etc, the news space continues to shrink where 4 and 6-page sections with heavy advertising percentages are the norm, the page continues to narrow and shrink and other budgets have been whacked many times. The same applies to broadcasting.
The Proxy Statement says that those financial performance measures (for bonuses) “include total revenues, operating income, net income from continuing operations, earnings per share...” plus about 10 other financial measurements (PS-18-19) PS also says that no bonus is guaranteed, “if minimum performance levels are not met....” (PS-18)
The Board of Directors Compensation Committee must equate “minimum performance” with DOWN, DOWN and more DOWN year over year.
With his 2007 performance, there is no way that Craig Dubow should receive his cash and stock bonuses. The shareholders are shown, by any measurement, his performance was certainly not “superior.” The Gannett Board of Directors should be ashamed.
I am friends with hundreds of Gannett employees, and very, very few are “devoted to the company” as Dubow insists in his Annual Report message (AR-6). Overwhelmingly, Gannett employees that I know have little respect for the direction of the company or those who lead it.
At the highest levels in Gannett, pay and bonuses seem to be based on good attendance -- and have become the emperor’s new clothes.
And in the last few days, Gannett’s first quarter 2008 results were announced. DOWN, DOWN and more DOWN again. If history is any indication, it will be another big bonus year for Craig Dubow.
Anon 4/22 7:50p
ReplyDeleteGreat post! This is quality posting at its best. Clearly this is saying that Dubow and Martore must go. Maybe at the annual meeting someone will make a motion for removing those two lame ducks.
Jim, have you determined your plan of attack at the annual meeting? OR they going to let you blog live? Are you going to show up? I think it would be a great showdown between you and Dubow.