Sunday, March 27, 2011

Stock | Analysts' forecasts diverge on GCI outlook

Wall Street media analysts at JP Morgan Chase lowered their price target on Gannett's stock Friday to $17 from $18 a share.

That same day, UBS analysts boosted their forecast of GCI's earnings per share, according to a story in American Banking & Market News. The story does not give the revised EPS figure, however.

UBS now has a “neutral” rating and a $16 price target on the stock, the story says. Two weeks before, analysts at Zacks Investment Research reiterated a “neutral” rating on GCI; Zacks also said it expected shares to reach $16.

GCI closed Friday at $15.14, up 1.4%.

Thursday, COO Gracia Martore told a Wall Street conference that publishing revenue in the current quarter would be down 6%-7% vs. a smaller decline in the fourth quarter. She also said she expected earnings per share of 41 cents for the quarter, the consensus of analysts' forecasts in a survey by First Call.

Lower expectations
Her publishing revenue forecast represents a worrisome widening in the rate of decline, and comes amid speculation about another round of unpaid furloughs for the coming quarter. Here would be the current quarter vs. the previous three actual quarters:
  • Q1: down 6%-7%
  • Q4: down 4.7%
  • Q3: down 4.8%
  • Q2: down 6.0% 4.4% (pro forma, constant currency basis)
The previous time Martore discussed EPS in advance of results, for the fourth quarter, she gave analysts a more bullish outlook, saying she expected GCI to hit the high end of their forecasts.

The stock's 52-week low is $11.65 and its high is $19.69. Shares are now down 8.2% from a year ago vs. a 12.7% gain in the S&P 500 index, a broader measure of overall market activity. In contrast, shares of the New York Times Co. are down 16.5% from a year ago; McClatchy is down 22.9%.


  1. Furloughed Fury3/27/2011 12:33 PM

    Can you say Q2 furloughs? Enjoy those bonuses, you underachievers in the pent house. Time to stock up on Kraft macaroni and cheese.

  2. It's important to note that the revenue declines they are forecasting for Q1 are greater than in the previous three quarters in spite of the improvement in the overall economy. The bottom line is that things are getting worse for GCI just as things are getting better for the overall U.S. economy.
    My conclusion is that corporate's idea of cutting employees isn't working and, in fact, is making the situation worse than it otherwise would have been. If they continue the cuts/furloughs, it means that things can only worsen further.

  3. If you are following the Newspaper Association of America conference going on in Dallas as I speak, you will notice its all about DIGITAL. Print's decline is here people. The economic issues remain: digital's dimes don't make up for print's dollars in revenues.

  4. I'm tired of the digital dimes don't make up for print's dollars argument. The reality is that we are destined to be Web-only publications, sooner or later. By delaying the transition to the Web, we allowed a lot of independent bloggers and others on to what should have been our turf. I don't know if we can ever get it back, but we should be fighting on the Web, and not in print, as I see it.

  5. Six months ago, with much fanfare, USA Today hired a stable of new managers (many from AOL), to devise new ways of bringing in money. If I read Gracia's report last week correctly, it hasn't worked, and new revenue is not streaming in. Maybe it is time the managers of these verticals started working and doing something. There's been far too much coasting and figuring out the landscape. If they can't find the new revenue, then get someone else who can.

  6. To be fair, no one at USAT said they could move Gannett's needle that quickly.

  7. 3:04 the reality still remains. yes we are going to be heavy digital and probably mobile at some point (tablets/smart phones). The point is that Gannett is still 70 percent revenues in print, it's not so easy to just shut down papers and try to survive overnight. Therefore, ALL papers are in "transformation" mode.
    Declining print and increasing digital each year. Finding a new way to sell to advertisers besides CPMs is the key to reversing the dollars to dimes problem. As well as ,charging for content.

  8. But Jim, as you point out in these other posts, GCI's revenues are declining, not increasing. I don't think it is much to ask for some demonstrable improvements in revenues for USA Today from these new hires, and we are not seeing it. Six months was the time editors used to give reporters to determine if they were good enough to be kept on, and I think six months is enough time for anyone. If you hired a reporter and didn't get a story in six months, he or she would be out the door. I would also like to note these new hires came at the expense of the reporting staff, which has been depleted.

  9. 4:42 Transformation is coming much faster than I thought it would, and the danger for GCI is that we will be swamped by the Internet. I don't have to tell you that advertisers have aleady migrated to the Web or, like my local supermarkets, to direct mail and home delivery of groceries. There is a fine balance between serving a dwindling number of subscribers with print, and serving the new Internet audience. We won't be around if we continue to pour money into printing and distribution, and beggar our Web contributions.
    On your other point, I am against blanket paywalls. Internet advertising is based on eyeballs, and the more eyeballs we get, the more revenues come in. Also, I read one study that shows only 24 percent of a daily newspaper's content is staff-originated. The other 76 percent is wire copy, ads, furniture, etc., and available on the Internet, for free. That 24 percent of our stuff is going to have to be very compelling and not available elsewhere for someone to want to pay for it.

  10. 5:34 I agree USAT should show progress in boosting its revenue. However, it would take a mighty big increase on USAT's part to move Gannett's overall revenues forward in a significant way. Here's an example of what I'm talking about, based on the fourth-quarter's numbers:

    Let's say USAT had $50 million in advertising revenue during the fourth quarter. Now, imagine instead that it had taken in $75 million -- a whopping 50% more.

    That additional $25 million would have translated into a far smaller increase -- 3.4% -- in Gannett's total publishing ad revenue that quarter, which was $722 million.

    Moreover, Gannett's TOTAL revenue that quarter -- including newspaper subscriptions, TV ad sales, plus digital -- was $1.46 billion. That additional $25 million from USAT would have increased overall revenue by just 1.7%.

    Wall Street would certainly love an additional 1.7% in revenue. But could USAT be expected to deliver the required 50% increase in ad sales to get there so soon after its reorganization? Very doubtful.

  11. Ok, Jim, if I buy your argument, then what yardstick should be used to determine if this batch of new employees is working or failing? Marketing is such a murky area to me, and difficult to quantify. I might accept a measurement that would include more ads running in USA Today, but I'm not seeing concrete results. With reporters and editors you can judge whether anyone is working.

  12. The trouble is that we have been announcing, helter-skelter, new sections and making promises to readers that we aren't delivering on. For example, here is a link to a November announcement of new features in the Life section which have never appeared:
    This is not the only example. I can give you others.

  13. "The point is that Gannett is still 70 percent revenues in print, it's not so easy to just shut down papers and try to survive overnight. Therefore, ALL papers are in "transformation" mode....

    Above from a previous post. What most people don't realize (and Jim as a business reporter you probably know this) but almost all of Gannett's digital revenue is from Careerbuilder (upwards of 90%) so of the 30% revenue figure almost all is from Careerbuilder. However, since Gannett owns 51% of Careerbuilder they count 100% of Careerbuilders revenue in their annual revenue (which is an allowable accounting practice) but is not reality. So the bottom line is that the digital revenue that does not come from Careerbuilder is incredible smaller compared to the overall picture and what Careerbuilder revenue that is counted is doubled. Hope that makes sense to all of you, no math and account types, but Gannett is so heavily dependent on print and with declines continue basically forever, GCI will find themselves in a very tight financial situation soon.

  14. @ 9:16: I think you're mistaken, but it's understandable. Your Life hasn't produced anything worth reading since its inception. It fills space with old news -- retreads from PR releases and other media. No wonder it seems that it's not fulfilling its promises.

  15. @9:57, that's a pretty remarkable piece of information. Did not know that.

  16. The verticals are a joke. Mismanaged. Out of touch with readers/advertisers. Overstaffed by do nothing managers.

  17. Heather frank is the worst. Except at b.s.


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