Friday, shares dived nearly 11%, to $13.50, after the second-quarter revenue figures left some Wall Street analysts disappointed, given a statement made in early June by President Gracia Martore. In her statement, Martore said that in publishing, "we continue to see improving trends and the percentage decrease in revenues is anticipated to be in the low-to-mid single digits."
In fact, the quarterly report showed a nearly 6% decline in publishing revenues -- the unwelcome higher end of the range she gave. During a conference call about the second-quarter results, one analyst asked for an explanation. His question, and Martore's response, offers a window on why GCI shares have remained low since Friday.
Martore first referenced Gannett's sale during the quarter of The Honolulu Advertiser and a small directories business. GCI also sold a small commercial printing business in the U.K. last year. Those businesses had about $35 million to $40 million of revenue in the second quarter last year, whereas the company is reporting no revenue in the quarter this year from those businesses, Gannett said.
"I think that when we talked about low to mid single digits, we were also talking on a constant-currency basis. And as we all know, the currency dropped off a bit towards the end of June and then you are absolutely correct in pointing out that there was about $35 million or $40 million of revenue in the reported revenue numbers that is simply absent because we are now reporting Honolulu and the directories business in discontinued operations and our small commercial printing business in the UK doesn’t have any reported revenues this year."
She continued: "I think the best number to hone in on is that 3.8% pro forma constant currency number as the number that we were focused on when we were looking and speaking about our numbers and so we feel good that we came in at the better end of that range that we talked about."
[Graphic: MarketWatch]
So what happened to the $125 million Gannett got in May on the sale of the Honululu Advertiser? Readers of this blog might recall that several us laughed at that claim, largely because David Black doesn't have that sort of money. It can be argued Gannett gave it to him free, and since there's no sign of a report of one-time revenue in this report that I can find, I think the figure is fiction.
ReplyDeleteIsn't Gannett holding the note on that deal?
ReplyDeleteGannett cannot turn the ship fast enough. You can criticize their decisions to consolidate, but there are people inside that predict it'll all come crashing down once 4thQ revenue goals fall WAY short. the backloaded year didn't count on a fragile econ into Christmas. Trust me.
ReplyDeleteThe hubs and holding jobs open (insider slowdown on hiring) is meant to mitigate harsh headlines to come on their performance.
Those goals may come in even more short, given the higher ad sales targets handed to Interstate Group papers. Have these targets already been built into upcoming Q3 and Q4 revenue and earnings guidance for Wall Street? What happens if the papers miss?
ReplyDeleteNo future here. What happened to their search of a CFO and CDO?????
ReplyDeleteYou have to read the press release:
ReplyDelete"including a net gain from discontinued operations of $0.08 per share" and "Gain on disposal of publishing businesses, net of tax 21,195". Before the crazies go nuts, this is the GAIN not the sale price.