The boost came despite a 4.1% drop in revenue, to $1.32 billion, from last year, the company said in a statement. Media stock analysts had expected earnings of 41 cents per share on revenue of $1.32 billion. GCI said it continued to benefit from lower newsprint prices, moderating ad revenue losses, and steep payroll cuts after thousands of layoffs over the past year.
In early-afternoon trading, GCI's stock was flat in a broadly lower stock market, after investors initially cheered the stronger-than-expected numbers. Shares traded recently for $18.10, basically unchanged from yesterday, after jumping as high as $19.69 earlier today. Still, that's far above the 52-week low, $2.99 a share, when the company was skating dangerously close to bankruptcy amid the deepening recession and plunging ad sales across the newspaper industry.
Digital, print revenue still soft
The report wasn't entirely rosy, however. The company's faltering digital segment continued to show revenue declines, because of the weak labor market's impact on GCI's mammoth jobs site, CareerBuilder. Digital revenues fell 1.8%, to $140.6 million, from $143.2 million last year. Still, that decline was less than the 7.2% drop in the fourth quarter of 2009 vs. the comparable quarter in 2008.Also, print advertising in GCI's biggest division -- newspapers -- remained weak. It tumbled 7.9%, to $665.9 million, from $722.8 million a year ago.
CEO Craig Dubow (left) noted that GCI had cut its debt further in the quarter, by $260 million. In the statement, he sounded more upbeat than he's been in many months -- reflecting continued gains in ad trends, plus the benefits of expense savings from lower newsprint prices, and deep job cuts and other cost reductions over the past year."The momentum we had at the end of last year continued through the first quarter,'' Dubow said. "Revenue trend comparisons improved in the quarter, reflecting the positive impact healthier economies in the U.S. and the UK had on advertising demand, as well as advertising revenue associated with the Winter Olympic Games."
Ad trend continues in Q2
President Gracia Martore told a conference call of stock analysts that the stronger revenue trend in the first quarter appeared to be carrying through in the current quarter. (Listen to the call replay, here.)
As expected, the broadcasting division was a big driver in the first quarter because of Olympics-related advertising. Revenues soared 16.7%, to $167.5 million from $143.5 million a year before, the report said.
The revenue picture also improved at the company's biggest daily, USA Today. Despite weak sales in categories including travel and entertainment, paid advertising pages rose 3.2%, to 544 from 527 a year ago. USAT has been lagging the company's overall results. (Update: Join the debate on whether these page gains really represents an improvement.)
Results for the first quarter this year included a $2.2 million tax charge related to the new federal health reform legislation, and the loss of tax deductibility for retiree medical costs covered by Medicare retiree drug subsidies.
USAT iPad response strong
Dubow trumpeted early results of USA Today's newly launched application for Apple's new iPad. Consumers have downloaded 175,000 copies in the first two weeks of its release, he said, ranking it No. 10 among free downloads for the device. "I think the team has done an absolutely remarkable job in a short time,''' he told the analysts conference.
Dubow cautioned, however, that two weeks was too short a time to establish a permanent trend. The app is free through July 4 under a sponsorship with hotel chain Courtyard by Marriott. After that, Gannett will set a subscription price. Dubow and Martore did not reveal that fee during a conference call question-and-answer session. "We're still evaluating that,'' Martore said.What do you think about today's news? Please post your replies in the comments section, below. To e-mail confidentially, write jimhopkins[at]gmail[dot-com]; see Tipsters Anonymous Policy in the rail, upper right.
How much of Gannett's reported profit of $117.2 million for the quarter came straight from employees pockets due to unpaid furloughs this year?
ReplyDeleteHow much of Gannett's reported profit of $117 million came from PointRoll?
ReplyDeleteRetiring of debt (and thus lower debt servicing costs) is helping as well.
ReplyDeleteI predict that so long as the overall market holds together, there is another three months of reasonably good potential in trading GCI, say to about the 2Q earnings report. After that it gets harder. I've been in and out of GCI several times since last April. Somewhere in the low $20s I probably say so long and thanks for the all fish. We've got a six figure profit in GCI the last year, and we're not rich people.
I am not as impressed with this report as Jim and stock market investors seem to be. Look at the revenue picture.
ReplyDeleteGannett's overall revenue fell 4 percent from the same period of 2009 to $1.32 billion. That was in the middle of the recession, so we are worse off than then. Ad revenue in the publishing division fell 8 percent.
Yes that is an improvement from the decline of 18 percent that Gannett had in the last quarter of 2009, but it is still a decline.
Gracia said the picture is still improving, and I hope it is.
So how did GCI get that dramatic improvement in profits? Layoffs, wage freezes and consolidations. They are milking the cow that they aren't feeding.
Gannett losing most of its earlier gains; after hitting $19.69 early, it's back to $18.37. The big drop on the Dow is bringing it back to earth.
ReplyDeleteMeanwhile, Florida unemployment just hit another all-time high:
http://www.miamiherald.com/2010/04/16/1582736/florida-jobless-rate-sets-another.html
Don't think I like THAT "change."
The stock market goes up, and the stock market goes down. Who knows why? It means nothing.
ReplyDeleteGoldman Sachs getting sued by the government on a pretty credible looking basis (at first blush, at any rate) just gave the market the vapors. It'll pass. The market had a lot of up days the last few weeks, it was time for a little pullback.
ReplyDeleteIf it doesn't turn into a full-on multi-day correction, then GCI will be back above $19 sooner rather than later.
The pressure is now on for Gannett to show year-over-year INCREASES in revenue, rather than slimmer losses, as was the case in today's first-quarter report. A revenue gain could come in June, when the company reports results for the current quarter.
ReplyDeleteBut absent revenue gains, the company will have to turn to more cost-cutting, because that -- along with lower newsprint prices -- is what kept profits so much higher in the last quarter. So far, digital's contribution remains weak at best.
Like all newspaper publishers, GCI still hasn't found a credible new business model to replace the current ad-supported one. The USA Today iPad trends will be critical because a for-pay model seems to be the only way to go. The 175,000 free downloads that Dubow mentioned this morning are encouraging. But what happens when readers have to pay to use that app?
...And they won't be paying initially, a mistake many publishers say they made with the Internet.
ReplyDeleteUSAT hasn't been able to charge for its iPhone app, presumably because the content is no different than what's online. Why will readers pay to use the iPad app? (To be sure, that's a challenge all but a few publishers face.)
ReplyDeleteI agree with you to question why people will pay to use the USAT app when they can get USAT free on their laptops. But there is another issue for publishers I have been reading about, and that is Apple wants 30 percent of the revenues companies like GCI might get from people using the IPad. I don't know how this is going be counted up and if Apple wants its cut everytime i use my IPAD to look at a newspaper ad. Frankly, I am not so sure the Ipad is the savior of newspapers that others seem to believe it is.
ReplyDeleteWhen was the last time that USAT's "iphone" app was upgraded??? NEVER.
ReplyDeleteDo you think with the "iPad" that they will actually produce a product that people will pay for, especially when the 3G version comes out and I can just go to the USAToday.com website for FREE???
Wake up and smell the coffee!!! The current app is not worth it now with a wifi connection!!! Who would pay when it is 3G???
Regarding USAT's increase in ad pages, I thought the language in the press release said something like "gains in xxx, xxx and xxx were MORE THAN OFFSET by weakness in ..." To me, that means that USAT made less money despite more paid ad pages. And by the way, how many of those paid ad pages were for Amish fireplace mantles?
ReplyDeleteWaiting to see how this will affect the common employees. That's all that matters. Anything else is just a smokescreen.
ReplyDeleteDepends on what sort of common employee you are. If you are a common well-paid USAT staffer, you are much loved and should have a happy year in 2010. Ditto digital common employees. But if you are a common employee at a community newspaper, you are not loved, but viewed as a slothful drag on company profits and a reason why GCI is not back at $80 a share. Your future is not secure. Rather it is one of continued consolidations and additional workloads heaped on a staff that is going to be short and spread thin.
ReplyDeleteSo by causing irreparable damage to its core business, Gannett beats earnings estimates for the first quarter. The suits must be proud of themselves.
ReplyDeleteExactly right, 3:08. Read the Q1 press release and you see that they produced that profit while revenue fell 4 percent from the same time last year. Ask yourself how that is possible, unless you bleed cash from some operations. USA Today isn't hurting, is it?.
ReplyDelete