Gannett's stock closed this afternoon at $2.92 -- down a stunning 9.9% -- as shares breached the $3 mark for the first time in the newspaper industry crisis. Amid a steep tumble in the broader stock markets, GCI continues to get hammered by rising investor unrest after last week's 90% dividend cut.This afternoon's price plummet comes as investors grow more pessimistic: The S&P 500 index fell 4.7%. The Dow Jones industrials slumped 4.4%. Gannett's market capitalization:
- Oct. 28, 2006 (when I started blogging): $14.3 billion
- Today: $666 million
What is to become of us?
ReplyDeleteA 95% loss of value in 18 months. Astonishing. But the same thing has happened to McClatchy, Media General and other publicly traded chains in virtually the same period -- they just got there a few months ahead of Gannett.
ReplyDeleteI need information -- we're in the last month of the first quarter. The stock is dropping. What is next? Anyone hear talk of more furloughs, cuts?
ReplyDeleteThere are no icebergs ahead. The USS Gannett is unsinkable. Fear not, go forward full steam ahead.
ReplyDeleteIt's like watching a train wreck
I'm just happy my broker sold my Gannett stock in October, when the price was around $16 a share. I didn't have much stock, but at least he didn't wait until Gannett hit the iceberg to jump ship.
ReplyDeleteSorry, but given Obama’s constant rants about Wall Street, the Big Three and basically anything else related to capitalism is it really any surprise that Gannett – which derives its profits from consumerism, is going down faster now?
ReplyDeleteLook, Gannett’s leadership severely weakened this company and brought it to the brink. But, Obama’s actions and his recently announced budget will most likely help finish it off as he’s finally made even a strong consumer like me stop. And, I was still pushing anyone who’d listen about the importance of personal spending last week. No more.
And, sorry to put this into words, but there’s no question about the media’s agenda setting powers and it’s admitted slant toward Obama. Perhaps Gannett, and others like it, should review that what they’re expending fairly presents all sides while it still has any power and jobs left.
Americans have short memories. Two years ago, what was bankrupting the federal financial machine was the war in Iraq. That war also was killing Americans, Iraqi civilians, and our leader at that time was not doing a thing about the war, the corruption, and was blind to what was happening in the housing market.
ReplyDeleteGannett's financial woes, along with all print media conglomerates, cannot be blamed on President Obama. The value of a share of stock does not mirror what Gannett has been doing internally for, what, years? According to all you longtime Gannett people, this problem with Gannett started a long time ago. So I respectfully disagree with 10:43 on his/her.
I was laid off in December. I'm barely making it on unemployment, I didn't have a long severance with full health benefits like a lot of others laid off. I am in my late 50s trying to find a job in this economy. I don't blame Obama for my layoff. I don't blame anyone anymore. I just have to survive and I didn't see George Bush doing much to help me last year.
Corporate is pigging at the trough by larding up their portfolios with options to receive free stocks in the future, and you are wondering why Wall Street is discountining the stock. Ever occur to anyone there is a connection, and all these stock options are diluting the value of GCI stock. If Corporate stopped these piggish activity, GCI's price would go up.
ReplyDeleteWhat happened at the meeting higher-ups went to at corporate last week???
ReplyDeleteThis comment has been removed by a blog administrator.
ReplyDelete11:12 you display your ignorance with your statement about stock. They received options dufus. You don't get paid unless teh stock goes up. And we wonder why we are in atough position. Guys like this don't know the basics how a business runs.
ReplyDelete11:05 - We’re in agreement that Gannett’s downslide began years ago.
ReplyDeleteBut, if you think Obama’s plan to increase taxes on individuals and corporations (already the second highest corporate tax rate on planet Earth) won’t result in more job losses, higher costs and the extension of pain for all, then I humbly believe that you’re missing the macro view.
My fear is that more and more companies will do to others, what Gannett has done to you - and will increasingly do - should Obama’s tax and spend actually be allowed to interfere with their profits, including mine.
All: I'm repeating this, from another comment string:
ReplyDeleteI know you're pissed off. And I try to stay away from editing comments. But "bitch" and "whore" are not acceptable. Please find another way to make your points.
I know less financially savvy colleagues who have never touched the 401(k) Gannett Stock match. Fifteen-plus-year employees. I shudder to think how many tens of thousands of dollars they've lost on the downward spiral from $90 a share to $3. And it makes me wonder why the company that presumably is supposed to care about them couldn't in some way suggest that they save themselves by diversifying their assets better.
ReplyDelete"I know less financially savvy colleagues who have never touched the 401(k) Gannett Stock match. Fifteen-plus-year employees."
ReplyDeleteAre you serious? I'm no financial whiz, but even I swapped the GCI match out for other funds every investment cycle over the past five years. It's been a dog now for quite awhile.
I sold my Gannett shares in the 401(k) pretty much as fast as the company deposited them; that began around 2004, when the stock was around $90.
ReplyDeleteYet, amazingly: Corporate was BUYING shares during that period, spending $1.8 billion on stock buybacks from 2005 through the third quarter of last year. See my post, here: http://tinyurl.com/bcc2hc
Your Sane Bull widget is about 20 minutes behind the market. It is showing GCI trading at $3 as I write this, while the NYSE shows it at $2.97 and falling. Another 9 percent drop so far.
ReplyDeleteYes, those stock buybacks were an amazingly great investment. Think of the investments they could have made with that $1.8 billion, such as buying Internet companies that would have ensured GCI's future, or buying Facebook like Rupert Murdoch did. Just shows how insane this management is.
ReplyDeleteIt is now $2.96, while the widget shows it still at $3. http://www.cnbc.com/ gives real-time quotes.
ReplyDeleteEach 0.01 cent drop is an arrow in the heart of the Crystal Towers.
ReplyDeleteO-U-C-H
ReplyDelete"Yet, amazingly: Corporate was BUYING shares during that period, spending $1.8 billion on stock buybacks from 2005 through the third quarter of last year."
ReplyDeleteWhat would be the purpose of doing that for a rapidly declining stock?
To hedge against a hostile takeover? To try and artificially create demand and/or boost stock prices?
??
2:04 Spending $1.8 billion to buy back stocks keeps the price of the stock artificially high, thus triggering the strike price execs need to turn their options into real put-in-the-bank stock. The problem giving stock options to execs is that execs bend over backwards to ensure the strike price is achieved so they can pocket the goodies. In the case of GCI, money needed for vital investments was siphoned off for foolish stock purchases. The company is left holding the bag because the stocks bought for $1.8 billion are worth probably about $20 million today.
ReplyDelete2:04 pm: Despite a lot of noise about driving "transformation" and "innovation,'' the sad truth is this:
ReplyDeleteGannett's current leadership came from an era when you managed in just a few, conservative ways: cutting expenses; driving up advertising rates, and buying back shares during what historically were temporary "dips'' -- buying opportunities.
Although many of us saw clearly that management's strategy was DOA, and sold our shares accordingly, Dubow & Co. continued down the ruinous path of their predecessors. They gambled with $1.8 billion in shareholder money -- and the company's future -- and lost.
I sure don't believe anyone took the notion of R&D seriously. If there is a place in the 10-K annual report, showing the dollar amount of investments in R&D, I can't find it.
Here at the "Arizona republic" they have consilidated the obituaries by saying in most of the listing please contact the funeral home at........and they give the phone number this was for 90% of the listing like only half a page........When are they going to list themselves?
ReplyDeleteWhat happens next?
ReplyDelete"Advertising revenue at the company's newspapers is falling over 20% a year, so even though the company remains profitable and nowhere near bankruptcy, the outlook appears hopeless."
ReplyDeleteThat's Gannett he's referring to.
http://biz.yahoo.com/ts/090302/10467042.html?.v=1
Gannett could take their dividend savings and buy back almost half the company right now.
ReplyDeleteThis price is a reflection of the heavy short selling, but is not at all a reflection of the value of the business. How much profit did CB bring in last year?
Here is a little stock option 101 for those who need it. The board of directors last week GAVE Dubow a contract that allows him to buy 500,000 GCI stock at $3.25. It is a pure gift. Dubow did not get any money or pay any money for this.
ReplyDeleteNormally, stock options expire in a few years. Let's say these options expire in 2011. If because of Dubow's hard work and sweat, the stock of GCI rises to $6.25 by 2011, he gets to buy 500,000 of those stocks at $3.25, thus making a profit of $3 on each stock, or $1.5 million. Or he can just take the $1.5 million in a paper transaction.
But if the stock is only worth $1 when the stock option expires in 2011, then Dubow gets nothing. The stock option is worthless.
This is pure insanity in how to to run a company. As corporate exec, you have a spare $1.8 billion. So what do you do? Do you spend it on some risky new venture that might or might not work to expand the company's business, or do you spend it on some sure way of getting the stock price up, such as buying the stock and getting it higher than the stock options you have been given. It is a no-brainer for any money-hungry exec looking forward to retirement on the tees. Of course, you spend it on the stock. You drain the money on innovative new products, or researching new ways of doing business, and you waste it on buying stocks.
Do that for a few years, and some sprightly new technology is developed and begins to erode your business base. Then comes a recession, and the artificial price of the stock deflates. Your business now is out-of-date and uncompetitive. But Dubow still has those millions in his pocket from using research and development funds to instead buy stocks. This is why it is all over for GCI.
2:26 I agree with him. The outlook for GCI is hopeless.
ReplyDeleteThe outlook for GCI stock may be hopeless, but in chaos there is opportunity.
ReplyDeleteI left the company on my own terms when it became obvious that Corporate wasn't interested in truly changing - and that was years ago. I watched as one forward thinking project after another got shot down because no one wanted to do the deep funding necessary to see the projects through to completion.
ReplyDeleteCorporate has been driven to ruin by focusing *only* on near-term profitability and not on what to do for long term survival.
Some interesting posts on this thread. Obama's been in office for what, six weeks, and now the neo-nuts have made him responsible for the economic mess we're in. Are you being a little hasty. Can't you give him at least two full months to get everything corrected?!
ReplyDeleteI too left Gannett several years ago.
ReplyDeleteBut I did not sell my shares of stock for any other reason than fear.
I was told that if you are fired, you loose your stock given as bonusses each year.
Where I worked, we had a tyranical publisher who had all department heads living in fear of getting fired at any moment, no matter how great a job we were doing.
So as soon as I was eligible to do so, I always sold every stock that "vested" for me within a few days. I had no intention of ghetting fired or laid off with stocks that I would loose.
Now, that was when we got stock at $50, and it was going for $80 a share, so it was a handsome little profit.
But us who sold our Gannett stock did so because we were afraid of getting caught in a firing and losing every dime of it.
I vowed that when our crazy publisher fired me, I would not own a single share of Gannett stock.
But I quit the misreable company before that happened! and with not a share of unsold stock to my name!
Tyrannical publisher? Sounds like my experience in Green Bay under that paper's previous regime--a man so tyrannical and craven that he would probably be proud to be cited here. It finally dawned on me that the folks who insisted, "Not all Gannett is like this!" in reference to this being had it wrong. I finally got it though my head: He's not an exception to Gannett. He IS Gannett.
ReplyDeleteI've not worked for Gannett for years. But of the seven companies I've worked for, in and out of journalism, Gannett is the only one I'd call mendacious to the core. Do they lie? Only when their lips move.
5:40/ So?
ReplyDeleteMendacious. I love that word. Also craven. Oh, yes.
ReplyDeleteI knew Gannett "management" wasn't for me when I sat in a meeting the jist of which was something along these lines:
Assistant News Idiotor: "There are nearly 1,200 World War II veterans dying per day."
Idioter-in-Chief: "Wow..." [his eyes bug out] "Imagine how much money we could make if we charged for obits and marketed this service through the funeral homes..."
Craven, indeed.
Let the stock burn.
S&P cuts Gannett's debt rating to junk status
ReplyDeleteNEW YORK, March 2 (Reuters) - Standard & Poor's on Monday cut Gannett Co's (GCI.N) ratings to junk status, citing worsening prospects for ad spending at the largest U.S. newspaper chain.
S&P also warned that some lenders could recover only a negligible amount of their investment if the company defaults.
Gannett's rating had been in danger of slipping to junk since the publisher of USA Today posted a 36 percent decline in ad revenue in the fourth quarter. A downgrade to junk status can significantly increase a company's borrowing costs.
Gannett's bonds fell significantly after the downgrade. Its 6.375 percent notes due in 2012 fell to about 62 cents on the dollar, down about 2.5 cents, according to MarketAxess.
Ad spending is expected to decline further this year in both Gannett's newspaper and broadcasting businesses, S&P said in a statement. Unfunded pension obligations have also been rising, and the company is likely to face an extended period of cyclical pressure, the rating agency said.
S&P cut Gannett's corporate credit rating by two notches to "BB," the second-highest junk rating, from "BBB-minus." The outlook is negative, meaning another rating cut is likely within the next two years.
S&P cut Gannett's senior unsecured rating by four notches to "B-plus," the fourth-highest junk rating, partly reflecting expectations of negligible recovery of zero to 10 percent in the event of default. The agency withdrew its "A-3" commercial paper rating on the company.
Gannett last week said it would cut its quarterly dividend by 90 percent in response to the global recession and tightening credit markets. For details click on [ID:nN25511455]. (Reporting by Dena Aubin; Editing by Leslie Adler)
Thanks 2:51. A good summary for how we got into our plight today.
ReplyDeleteGreat post, 2:51, on stock options. Everyone should be back and re-read that one.
ReplyDeleteYou get it.
But not like CD get$ it.