Three reasons to expect first-quarter furloughs

1. History and 'comps'
Gannett has ordered one-week unpaid furloughs every first quarter since 2009, mostly for U.S. newspaper employees. Yet, each one has created a dilemma known among investment professionals as bad "comps" -- short for comparables. Here's what that means.

Wall Street expects companies to crank out higher profits every quarter. As GCI's revenue has nosedived, the only way to bolster profits has been through cost-cutting. In this year's first quarter, for example, Corporate saved $10 million furloughing workers.

But absent another round of furloughs in next year's first quarter, Corporate must gin up $10 million in extra revenue just to stay even with this year's first quarter. That doesn't seem likely, however.

2. Wither revenue?
GCI's overall revenue has fallen, year over year, in each of the past three quarters because advertising sales in the biggest division -- U.S. newspapers -- keep tumbling. In the most recent quarterly report, published last week, total revenue fell 3.5% from a year ago, to $1.27 billion. Print advertising was worse: It plunged 8.5%, the biggest quarterly decline in nearly two years.

That's especially worrisome because print ads accounted for nearly half the quarter's total revenue -- nearly the same as a year ago.

Corporate has tried to make up for those losses by investing in new businesses -- for example, the DealChicken daily deals site that is now in nearly 50 U.S. markets.

But any gains from those initiatives will take many months to produce tangible results. Meanwhile, other once-promising investments have withered: GCI just shut down its Moms Like Me network amid heightened competition for the female consumers it targeted. And, I've been told, the PointRoll advertising services subsidiary has lost its footing.

3. Investor impatience
Ultimately, Wall Street cares about one thing: the company's stock price. And Gannett's has been heading south nearly all year long.

Friday, it closed at $11.16 a share -- way off the most recent high, $18.93, reached last February. To be sure, other newspaper publishers' stocks have plunged, too.

But investors don't have to bet on newspapers. Indeed, some are pulling out. Earlier this month, GCI's single-biggest investor -- JP Morgan Chase -- disclosed in a regulatory filing that it had slashed its stake in the company. As of Sept. 30, Morgan owned nine million shares, or 3.7% of all GCI's stock. That was down from 22 million only three months before, when it held 9% of all.

Furloughs alone may not reduce payroll costs enough, depending on what happens with ad sales during the current quarter. That's because GCI simply has fewer employees to furlough, so the savings aren't as great.

This year's $10 million in furlough savings was less than the $12 million in Q1 2010 -- and only half the $20 million in Q1 2009. No wonder. GCI had 41,500 employees at the start of 2009 vs. 32,600 at the start of this year.

If revenue falls even more in the current quarter, GCI might take more drastic steps, such as layoffs. Wall Street wouldn't mind.

During last week's quarterly conference call with media stock analysts, the first question put to CEO Gracia Martore was about plans for more cost cutting. She tried steering the conversation in another direction. "What we are much more focused on is creating revenue opportunities to grow the top line,'' she told one analyst, Craig Huber.

Still, Martore left little doubt about the alternative. "We will continue," she said, "to do the good job that Gannett has always done in being fiscally disciplined."

Earlier: Corporate's January memo ordering the last round of furloughs.

Stock | Ariel trims GCI stake in first quarter

Chicago-based money manager Ariel Investments sold 2.1% of its Gannett stock during the first quarter, the Motley Fool investing site says. Still, GCI remains No. 1 among Ariel's 116 holdings, valued at $5.7 billion.

GCI stock recently traded for $14.01 a share, up 17 cents, or 1.2%.

Ariel was GCI's No. 3 investor at the end of the quarter, with 14.3 million shares, MSN Money Central says.

JP Morgan Chase was No. 1, with 22.6 million shares. Alliance Bernstein was No. 2, with 16.8 million.

Motley didn't say when Ariel sold its stock, or give any other details. During the quarter, shares traded from $14.26 to $18.93.

Stock | Top investor Ariel tweaks GCI stake again

The Chicago-based money manager said it had added about 100,000 Gannett shares to its trove, raising its stake to 14.9 million from 14.8 million a year ago, according to a regulatory filing today. Ariel Investments' share of GCI remained virtually unchanged: 6.2%, the U.S. Securities and Exchange Commission document says.

Ariel's notice follows similar filings by some of GCI's other big investors, including BlackRock, which recently emerged in the No. 2 position, with 15.2 million. AllianceBernstein also filed notice recently.

GCI's stock closed today at $17.19, up 13 cents, or less than 1%.

Urgent: BlackRock jumps to GCI's No. 2 investor

BlackRock's disclosure came today in a filing with the U.S. Securities and Exchange Commission.

The New York money manager says it had amassed a stake equal to 6.37% of Gannett stock, a total 15,227,104 shares, as of Dec. 31, the SEC filing shows.

BlackRock had previously disclosed a much smaller stake via BlackRock Institutional Trust Co.: 8,193,354 shares, or 3.4% of GCI's shares. That was as of Sept. 30.

The firm's emergence comes after two days of unusual trading in GCI shares that lifted the company's stock about 10%.

Based on the most recent data I can access, BlackRock would now rank as GCI's No. 2 investor, after JP Morgan Chase, which recently trimmed its stake to about 21.4 million shares, or 8.9% of all.

Under federal regulations, investors are required to notify the SEC when their ownership in a company exceeds 5%. Today's filing doesn't say when BlackRock bought its additional shares, or the price it paid. From Oct. 1 to Dec. 31, GCI traded between $11.76 and $15.78 a share, according to Google Finance. Today, GCI recently traded for $16.66, down less than 1%.

As of Sept. 30, BlackRock’s assets under management "total $3.45 trillion across equity, fixed income, cash management, alternative investment, real estate and advisory strategies," the company's website says.

Stock | No. 1 GCI investor JPMorgan trims stake

In a new regulatory filing, JP Morgan Chase disclosed today that it sold nearly 2 million of its Gannett shares in recent months, reducing the size of its overall stake in the company to 8.9% from 9.6% last fall, and 10.2% in April.

The banking giant owned 21.4 million shares as of Dec. 31 vs. 23 million at Sept. 30, according to filings with the U.S. Securities and Exchange Commission.

Morgan emerged as GCI's biggest shareholder in May, when it notified the SEC that it had boosted its holdings by at least 17 million shares.

Today's filing doesn't say how much Morgan received for the shares it sold. From Oct. 1 to Dec. 31, GCI traded between $11.76 and $15.78 a share, according to Google Finance. Today, GCI recently traded for $14.86, up about 1%.

Prior to today's filing, GCI's No. 2 shareholder was mutual fund giant Vanguard Group, at 13.7 million shares, or 5.7% of all, investment site MSN MoneyCentral says. No. 3 was money manager Ariel Investments, at 13.5 million, or 5.7%. That data is at Sept. 30.

Compared to three months ago, are your GCI holdings higher? Lower? The same? Post 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.

Stock | Post-Morgan, GCI keeps moving higher

[Arrow shows Thursday, when GCI traded as low as $14.12; live chart]

Adding momentum to yesterday's big jump, Gannett shares recently traded for $16.81 a share after running as high as $17.13 today, as investors continue to cheer investment bank J.P. Morgan Chase's huge bet on the nation's No. 1 newspaper publisher.

Yesterday, GCI closed 3.4% higher after Morgan disclosed in a regulatory filing that it had boosted its stake to 24 million shares -- a block worth $398.2 million, based on yesterday's closing price.

Urgent: J.P. Morgan jumps to No. 1 stockholder; bank bulks up to 24M shares, new document says

The investment banking goliath has added at least 17 million shares in the last four months, a new regulatory filing today says, boosting its overall share of Gannett's stock to 10.2%, or 24 million shares as of April 30 -- making it the company's single biggest holder.

J.P. Morgan Chase's filing early this morning with the U.S. Securities and Exchange Commission does not indicate the bank is anything more than a passive investor. In other words, it is not seeking to change the company's direction via assuming a seat on the board of directors.

The bank's previous stake is listed variously as 5.4 million, or 2.3%, on the low side, and 7.4 million or 3.1%, on the high side. Both those figures are as of Dec. 31. I can't explain the different figures, which come from two different databases. At the moment, I'm looking for more information within Gannett's SEC filings.

GCI soared after the filing: Shares recently traded for $17.14, up $1.10 a share, or 6.9%. That rise far outpaced the Dow Jones Industrial Average and the broader S&P 500 Index, both of which were up less than 1%.

Today's filing doesn't give the prices J.P. Morgan paid. Between Dec. 31 and April 30, Gannett traded from a closing low of $13.53 to a closing high of $18.67, Google Finance says.

Gannett's two top shareholders had been Ariel Investments, with 14.8 million, or 6.3%; and Vanguard Group, with 12.7 million, or 5.4%. Those figures also were as of Dec. 31, public documents show.

Related: The Wall Street Journal's story