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New York Times Company (NYT)
New York Times Company Reports Unexpected $74.5 Million Loss
The New York Times Company is a hugely popular media company. The company publishes multiple newspapers, including The New York Times and The Boston Globe, and also runs a number of websites including About.com. And like many other media companies, they have been severely crippled by the current economic times. Many people have been wondering if this is heralding the end of print media such as newspapers; but will the New York Times Co. be able to prove the critics wrong?
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The New York Times Company's quarterly report was pretty disappointing. Revenue was down 19%, falling to $609 million. With this revenue, the company was unable to turn a profit, posting a quarterly loss of $74.5 million, the equivalent of a loss of 52 cents per share. The company reported that a lot of the problem came from the New England Media Group, which includes The Boston Globe and other publications. Even excluding special one-time charges, the loss would have still been 34 cents per share. The loss was much greater than expected; analysts were expecting a loss of only 4 cents per share.
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Not surprisingly, a large part of the problem was due to a decrease in advertising revenue. As the economy has gotten worse, money has gotten tight, and individuals and companies are both cutting unnecessary expenses. Unfortunately for those in the media business, advertising is sometimes seen as a place where cutbacks can be easily made; while advertising is helpful in promoting a company, it isn't critical in maintaining everyday operations. Overall ad revenue fell 27%; contributing to this was a 45% drop in classified ad sales, and a large decrease in overall print ads. Even internet advertising fell 6%.
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What about the future? Unfortunately, CEO Janet Robinson has stated that at this time, they are projecting that ad revenues are not expected to grow next quarter either, and will likely stay at this level. However, at the same time she stated that she is optimistic that the economy will begin to recover, and with that will come a turn of events for her company. The company is taking steps to prevent as many losses as possible; the company has done well in cutting costs, with operating costs dropping 10% this past quarter.
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The most promising thought for the New York Times Company, and other similar companies, is that there is hope that their internet segment will eventually make up for their print segment losses. One of the contributing factors to the company's loss is that people have stopped purchasing the print edition of newspapers, because it is free to read online; and indeed, the company has seen that their internet segment is growing, rising to contribute 12.8% of the company's total revenue. And although internet ad revenues fell as well, the degree it fell was much smaller than the other segments. If the New York Times Company can continue to be careful with its spending, and takes advantage of this shift to online media, they should be able to pull through this. Although it will still be hard for a while, hopefully their headlines will eventually be able to proclaim their good news.
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