Updated at 5:18 p.m. ET. In a much-anticipated report, Gannett just disclosed that earnings dived 36% from a year ago, on a worse-than-expected drop in revenue. Chairman and CEO Craig Dubow said the near-term outlook is grim. Flagship USA Today's sales tanked dramatically. Shares swooned to new 20-year lows.
The beleaguered company's profits sank to $232.7 million, or $1.02 a share, from $365.7 million, or $1.56 a share, a year ago. Revenue totaled $1.72 billion, down 10% from last year. Wall Street analysts had expected $1.02 a share in profits, but $1.74 billion in revenue, Yahoo Finance says.
Disappointed investors dumped Gannett shares. They traded as low as $14.70, down more than 15%, before recovering late in the morning. GCI closed at $16.57, down 4.5%, on extraordinary volume: 16.5 million shares traded vs. the 4.8 million average.
In a just-concluded conference call with stock analysts, Dubow said sharp revenue declines in June appeared to be continuing this month. "We're seeing probably more of the same," he said. And Chief Financial Officer Gracia "The Knife" Martore, who dominated the discussion, said Gannett planned to use its cash horde to look for more digital deals, such as the recent buyout of ShopLocal.com, and to further pay down debt.
"The weakening economy had a dramatic impact on our results,'' Dubow said in the earnings report. He cited "pressure on advertising demand" for the newspaper division, particularly classified advertising in "real estate-centric markets in the U.S. and in the UK."
Sharp revenue decline in June
In a separate monthly statistical report, Gannett said June revenue fell 12.1% from a year ago, amid further erosion in USA Today's results. The top-circulating paper's revenue fell 27% from June 2007 on 236 paid ad pages vs. 329 last year. The monthly tallies for the company and for USA Today were the worst so far this year. USAT's results follow a big shake-up last month in the daily's advertising sales leadership.
Amid growing pressure from big investors, Gannett this morning did not disclose any big shifts in its strategy -- such as a spinoff of the company's TV division or its digital properties, steps taken by other newspaper publishers to satisfy increasingly restive investors. Boxed in by a failing strategic plan, and a worsening U.S. economy, Dubow's options now look increasingly limited.
With about 46,000 employees, Gannett is the nation's top newspaper publisher, with USA Today and 84 community dailies in the U.S., and 17 in the United Kingdom. It also owns 23 TV stations, and scores of other businesses.
Related: Gannett joins list of newspaper victims
Earlier: What big investors expect this morning
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[Image: this morning's USA Today, Newseum]