Tuesday, February 03, 2009

Breaking: Pressing dividend, stock closes below $5

[GCI traded as low as $4.82 a share today]

Gannett's stock has just closed at $4.96 a share, a critical level that could spur mutual funds and other big investors to dump it from their portfolios, risking further decline. Such institutional investors own most of the shares, and are prohibited by their charters from holding stock worth less than $5.

The new low pushes the dividend yield up to 32%, pressuring the board of directors more to cut the payout -- a possibility Chief Financial Officer Gracia Martore (left) warned about Friday, during the fourth-quarter earnings conference call.

"Every company globally is very focused on conserving debt, conserving cash,'' Martore told Wall Street analysts, according to Seeking Alpha's transcript. "I think that you will find that we had to look at the dividend back in October and I think that the board wisely wanted to see what the impact of a burgeoning credit crisis and more difficult economic conditions would bring."

Martore continued: "We will -- the next time the board has to act on the dividend is in February and I know that there'll be significant conversation around that. In the context of where credit markets are, where the economies are and where cash conservation comes into play across the country. So we will take that up with the board again in February and we will act appropriately."

With today's close, Gannett's stock is now down 86% from a year ago vs. a 39% decline in the S&P-500.

Please post your replies in the comments section, below. To e-mail confidentially, write gannettblog[at]gmail[dot-com]; see Tipsters Anonymous Policy in the green sidebar, upper right.

[Image: Google Finance]


  1. How long does the stock have to be under $5.00 before it has to be sold? Is it charter specific or is there one big rule?

  2. Will Gannett buy back its stock?
    Does it have any money to do so?
    If institutional buyers dump it, who else might want it?

  3. Next stop, the Pink Sheets.

  4. Money market funds handling 401K deposits have a general rule of not buying stocks that are under $5 because they are too vulnerable and are not as closely tracked as those of big companies. Some of these funds, particularly Vanguard, are very, very conservative. Actually, I think the money market funds have already left GCI behind as a basket case, and gone into other companies likely to prosper.

  5. Money market funds handling 401K deposits have a general rule of not buying stocks that are under $5 because they are too vulnerable and are not as closely tracked as those of big companies. Some of these funds, particularly Vanguard, are very, very conservative. Actually, I think the money market funds have already left GCI behind as a basket case, and gone into other companies likely to prosper.

  6. At least we're not Gatehouse.

  7. Gannett's better off selling packages of one share of stock with leftover Inaugural issues. Though, at the rate it’s going, both would hardly be worth the money one would get by taking them to your local recycling center.

    "It's not the economy stupid, it's managment."

  8. It is humbling. We are working harder, and the stock keeps collapsing. Our efforts are not worth what they once were.

  9. The 401(k) match as I recall was in Gannett stock. I kept moving that money over but then got laid off so WTF.

    Working harder for less. Welcome to the Third World.

  10. sorry if this impacts hardworking journos but i am glad the people who canned me are sitting on worthless barrels of Gannet stock.
    hee hee.
    goes around....comes around?

  11. Rome is burning! So GCI is getting what it deserves for haphazardly laying off so many good employees while a lot of rotten ones remain behind, kissing ass as always, portraying themselves as competent when nothing could be further from the truth. When you condone ass-kissing as a way to keep your job, what do you think you're going to get? A workforce that is afraid to innovate or raise red flags for fear of being seen as boat-rockers. Years of that has finally caught up.

    What goes around comes around, ehhh? This company drove off a lot of good people in recent years. Broke their hearts and bank accounts. This company also wiped out many family-owned papers/competitors with not-so-ethical tactics over the decades. Some bad karma still floating around smalltown America.

    There has been an underlying sense of corruption and greed and simply idiotic decisions for quite some time. And it took this sort of economy to expose all the fraud and lack of preparedness. The bully is dying. The incompetents and ass-kissers don't know what to do. GCI built its Crystal Palace, flaunted its arrogance and now has a crumbling workforce and a business run into the ground by empty suits and simply some of the worst employees a company could harbor. See where your diversity quotas led? See how greed can turn on you? See what laying off truly dedicated, smart people got you?

    Goodbye Gannett! Your papers are rotting on the racks as ads disappear. Your TV stations are run by parochial amateurs and your web sites are a joke. Sell the Crystal Palace while it's still worth something. You're about to be obsolete. Adios.

  12. Here is an idea sell the company cars. And fire the dead weight Micro managers in the publisher positions. Time to clean house again. The ship is sinking grab the life vests we are taking on water and no one at Gannett knows how to fix the hole without upsetting the good old shipmates club. Someone needs to walk the plank.

  13. Fire all the micro managers. There's one in St. Cloud you can have. We don't need her.

  14. 6:44 you hit the nail on the head.

    Martore, executioner of the GCI hit list, and Dubow, Martore's puppet, need to pack their bags along with the rest of the GCI management committee and the Board.

  15. GCI is going to $3 and can't really do anything about it. From a cash conservation standpoint is HAS TO reduce significantly or suspend the dividend. The reason is simple. If it does not, GCI will face a certain additional downgrade from the investment rating companies. This means a much higher debt service and even difficulty obtaining credit altogether.

    So here you are. Cut the dividend and the institutional funds dump it. Don't cut it, get downgraded and those same funds dump it. The stock price will continue to slide further as sellers flood the market with GCI shares. Right now it's happening relatively slowly. You'll waker up one day and it will drop $1 or more.

  16. Given the degree of ignorance on financial matters that the great majority of posters to this blog display, I would be surprised if any of them are current or former Gannett employees.

  17. Good questions and comments here. Can anyone at corporate ask our retired CFO, Larry Miller, for advice? After all, the company is paying him more than $300,000 a year for a part-time "consulting" deal.

    Surely, he has some advice on what to do. Doesn't he?

    Larry? Where are ya? Gracia and Craig need H-E-L-P!!!!!

  18. 8:18, are you that delusional nitwit that keeps insisting your stock is the same thing as a secured loan, that you are guaranteed top dividend returns because you "loaned" the company money by BUYING its stock?

    If not, how strange it is that guy is MIA on this post? I last saw he even got a gullible employee or two to think his self-serving rationale made some sense.

    The stock is tanking, with or without dividends. Those who hold significant Gannett stock and comment here are panicked, for good reason.

  19. This is about management, plain and simple. Yes, the economy is bad. But things were on shaky ground at this corporation BEFORE the economy tanked. Dumb decisions like not cutting the dividends and forcing this one-size-fits-all journalism down every paper's throat.

    Our paper has been profitable for years. Our Web site was growing by leaps and bounds. But corporate-forced changes over the last few years have started to turn things the other way, such as the forced switch to the Go4 Web engine. Our Web site has not been the same since.

    Someone needs to get in these people's faces and scream "ENOUGH!" We are individual communities with individual tastes. It's high time the company realized that.

    There's strength in diversity.


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