Tuesday, February 2, 2010

Advertising revenue declines continue at Gannett; dramatic cost cuts lead to a profitable quarter

Sometimes the markets drive me crazy, like when a company reports good earnings but the stock declines anyway. All of this is tied to expectations, and whether the financial results were already built into the stock price. Occasionally, however, the market reacts logically when a company announces "good earnings", but the underlying numbers reveal continued problems.

That was the case yesterday when Gannett share prices fell 11 percent despite the fact that the company reported that the company earned $133.6 million in the quarter versus a loss of $4.7 billion in the last quarter of 2008. The revenue story, though, was bleak, with newspaper ad revenue falling a further 18% in the final quarter of '09 -- and remember, the last quarter of '08 showed huge losses.

Across the pond things were not much better as Gannett owned UK media firm Newsquest also reported revenue declines of almost 18 percent, though they did see improvement over Q3 as real estate advertising improved.  Newsquest owns some 200 properties in the UK included a small portfolio of trade journals such as Insurance Times and Boxing News.

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