(Updated at 3:29 p.m. ET; frequent updates throughout the day.)
Continuing to benefit from deep cost cutting, Gannett just announced second-quarter earnings per share soared 170% from a year ago, to 81 cents vs. 30 cents, on a 1.6% decline in revenue -- far exceeding the most optimistic Wall Street forecasts. The 81 cents included a one-time gain of 8 cents from discontinued operations, the company said in its report.
Earnings per share from continuing operations and excluding special items for the second quarter were 61 cents vs. 46 cents in the same quarter last year. Operating revenues were $1.37 billion compared to $1.39 billion last year, a decline of $22.2 million.
Analysts were expecting EPS of 53 cents on $1.39 billion in revenue.
Investors groan
With less than an hour before markets close, Wall Street bolted for the exits, pounding Gannett's shares on a day when stocks overall are plunging.
In recent trading, GCI's stock fell more than 10%, to $13.54, down $1.57 -- apparently because publishing advertising wasn't as strong as expected. Shares traded earlier as low as $13.43, down 11%.
Other newspaper stocks also were sharply lower. The S&P 500 index was down, too, but by a much smaller 2.8%.
Political ads a boon
Operating expenses totaled $1.1 billion vs. $1.2 billion in the second quarter a year ago. Advertising revenue continued to decline, albeit at a smaller rate. They were $692.2 million in the second quarter, down 5.7% from a year ago. That compared with a 7.9% decline in the first quarter, and 26% a year ago.
TV revenues jumped on political advertising. They were $177.5 million vs. $148.4 million, reflecting a more than 60% rise in the automotive category, double digit increases in retail and packaged goods, plus a $9.9 million bump in politically related advertising.
The company's best-known brand, USA Today, continued to struggle amid weak travel-related spending. "The automotive, retail and packaged goods categories improved during the quarter at USA Today, while the entertainment, travel, telecommunications and pharmaceutical categories lagged last year,'' the report says.
USAT's paid advertising pages totaled 580 compared with 602 in last year's second quarter -- down 3.7%. That showed erosion from the first quarter, when ad pages totaled 544 vs. 527 in last year's first quarter -- an increase of 3.2%. (First quarter statement.)
Listen to the 10 a.m. ET webcast of management's briefing with analysts, here.
Related: Industry watcher Ken Doctor says Gannett's "whimper and bang show strategies plainly in flux"
Friday, July 16, 2010
16 comments:
Jim says: "Proceed with caution; this is a free-for-all comment zone. I try to correct or clarify incorrect information. But I can't catch everything. Please keep your posts focused on Gannett and media-related subjects. Note that I occasionally review comments in advance, to reject inappropriate ones. And I ignore hostile posters, and recommend you do, too."
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Jim, I am not a Wall Street person. Could you explain why they would be disappointed and Gannett stock would drop?
ReplyDeleteits because they missed on Rev.
ReplyDeleteBut I thought revenue came right in on analysts' forecasts? Which forecast figure are they looking at for comparison?
ReplyDeleteHmmm. Since I last checked, yesterday, it looks like the average forecast revenue rose to $1.4 billion, so now I see what's wrong: Wall Street wanted $1.4B and Gannett delivered $1.39B -- a difference of $100 million.
ReplyDeleteInteresting fact...PointRoll added over 13.5% of the earnings this past quarter and basically made this earnings number. It is the only business actually growing at Gannett.
ReplyDeleteI listened to almost all of the conference call with analysts, but nothing jumped out. Dubow sure likes management at CareerBuilder, that's for sure.
ReplyDeleteAnd I didn't realize the volume of artwork they're pushing through the GPCs: something like 12,000 pieces and 14,000 orders during a recent week. And that was for what -- 22? -- sites?
The Wall Street disappointment was about pub revenue being down 6% vs guidance of "low to mid" single digits. In the call, they were asked about this, and they clarified that the 6% included currency exchange effects and discontinued operations (Honolulu and UK printing). Without those, it's more like 2%. The stock price bounced halfway back to yesterday's close as soon as they explained that.
ReplyDeleteMartore said that currency exchange issue happened late in the quarter, I think, which was why it caught analysts by surprise.
ReplyDeleteFrom a Dow Jones story on the conference call, regarding paywalls in Tallahassee, Greenville and St. George:
ReplyDelete"Martore said the company is beefing up its local content offerings in each test market in areas of particular interest to each community, and it is trying different price points in an effort to see what works.
"Martore said in three to six months, Gannett should be 'much better informed about what business models are sustainable.'"
the market is down 200 points. Gannett stock went with it. Lets have a little persepctive folks
ReplyDeleteWatching from a newspaper company that's already gone thru bankruptcy, I notice that GCI's total Q2 advertising revenue ($692 million) is pretty much half of what it was in Q2 2006 ($1.377 billion). Is the workforce half of 2006 levels, as well?
ReplyDeleteJim:
ReplyDeleteYour post from this morning might have needed some math checking. The difference between $1.39B and $1.4B is just $10 million, not $100 million.
Mike
D'oh! Thanks, 10:44 pm. That makes Wall Street's reaction even more strange. $10 million is chump change.
ReplyDelete"Pres/COO/CFO Gracia Martore said on a conference call with analysts that Gannett's newsprint consumption in the quarter was down "around 15% to 16%" and its [newsprint] price was down "around 31% to 32%.""
ReplyDeleteIncredible cost management from a consumption standpoint. But without that price cut, the company is significantly less profitable. The expense line was down $89 million in the quarter, but a significant portion of that savings could be attributed to newsprint expenses which can only be controlled to a degree (usage yes, price sometimes, but only to a point).
The term "newsprint" is mentioned six times in the 8-K, while the term "furlough" is mentioned only four times.
In the prior quarter 8-K, "furlough" is mentioned just once.
Excellent points, 8:41 p.m.
ReplyDeletejim -
ReplyDeletedont forget to factor in the impact of BP advertising the Gulf - Shreveport, Monroe, Alexandria, Tallahassee, etc- all getting BP ads at national rate - more than explains the USCP gains in national advertising trumpeted in the earnings release
happy to have the cash coming in - but it's kind of like celebrating selling more shingles after a tornado hits - not exactly the kind of event you can count on to repeat next year