But as non-events go, this beauty nonetheless required Dubow (left) to reassure employees that Gannett remains "healthy." (Now, there's a word the attorneys and other regulatory compliance experts spent a lot of time debating.) What's more, Dubow further felt the need to reassure everyone that GCI can still "pay our dividends and our debts.'' So, comforting!Still, the most outrageous part of Dubow's memo is this: "Nothing about our company or its prospects changes as a result of this non-cash charge." (If not a $3 billion write-off, what would, exactly, change the way they do business in the Gannett Tower?)
I'm by no means a finance expert. And I note that Gannett says much of this write-down concerns the company's British newspapers: 17 dailies and about 300 weeklies in the Newsquest chain. There's been chatter in the past -- denied by the company -- that Gannett might want to dump Newsquest. Perhaps that's the next shoe to drop.
But I also wonder whether any of the company's U.S. operations are now so much less valuable that Gannett might want to hunt for new buyers for them as well. (Surely, there are some rich business types in Phoenix who'd like to get their paws on The Arizona Republic.)
Wall Street investors so far aren't panicking on today's news -- hardly surprising, given speculation it might be coming. So far, Gannett shares have traded as low as $27.25 a share, a decline of about 1%. That's still well below the 52-week low of $25.17.
Your thoughts, in the comments section, below. To e-mail confidentially, use this link from a non-work computer; see Tipsters Anonymous Policy in the green sidebar, upper right.
Actually, Jim, I think the most outrageous part of Dubow's memo to the staff is the following:
ReplyDelete"So thank you for your loyalty and hard work. As always, I deeply appreciate all you are doing for Gannett."
I wonder how all the recently laid off long-time Gannett employees feel about how much he appreciates their loyalty.
A Gannett Blog reader just suggested reading this backgrounder on writedowns: http://tinyurl.com/6y6dwq
ReplyDeleteSOUND FAMILIAR?
ReplyDeleteGu says his research suggests companies that write down goodwill typically end up closing business units, selling assets, and laying off employees. “If you look at the entire trip from acquisition to writeoff, the shareholders of the acquiring firm are worse off,” he says. “Goodwill impairment writeoff is not a benign event. It represents the public acknowledgment of the failed nature of an acquisition.”
I'm sorry, but this scares the s*** out of me. We are not filling KEY positions in the reporting staff. And the explanation is "we have to make it look as if we are losing less money." We are not doing more with less any longer; we are doing less with less.
ReplyDeleteOh eagle eyed one, this was in this year's annual report:
ReplyDeleteThe value of our intangible assets may become impaired,
depending upon future operating results
Goodwill and other intangible assets were approximately $10.8 billion
as of Dec. 30, 2007, representing approximately 68% of our total
assets.We periodically evaluate our goodwill and other intangible
assets to determine whether all or a portion of their carrying values
may no longer be recoverable, in which case a charge to earnings may
be necessary, as occurred in 2007 (see Note 3 to the Consolidated
Financial Statements). Any future evaluations requiring an asset
impairment charge for goodwill or other intangible assets could affect
future reported results of operations and shareholders’ equity, although
such charges would not affect our operations or cash flow.
Of course Dubow appreciates "all you are doing for Gannett." It's what keeps his bonus fund in the black, even while the rest of the company goes red!
ReplyDelete