Tuesday, April 21, 2009

Analyst: the $110 million McClatchy hoped to save probably won't be enough

Earlier this month I said the $110 million in expenses McClatchy hoped to cut wouldn't be enough to stave off another round of layoffs in June. Today, a published report by Forbes says newspaper analyst Catriona Fallon also believes McClatchy's cuts probably won't be enough.

Newspapers have been pummeled by declines for the past few years, with more readers turning to free and timely news online and advertisers following suit. But the financial crises has pushed many newspapers closer to the brink, as advertisers continue to hold off spending in an uncertain economic climate.

McClatchy has responded with deep staff cuts. The Sacramento-based company said in March it would eliminate 1,600 positions. Coming on top of previous layoffs, the latest cuts will bring McClatchy's work force down by a third in less than a year.

The goal is to reduce expenses by $110 million. The company expects the cuts to cost about $30 million in severance and other charges, but has not said how much it will record in the first quarter.

Even as it cuts costs, McClatchy is looking for ways to reduce its debt, which stood at $2.04 billion at the end of the year. It has been forced to pay higher interest rates in return for more flexible terms from lenders since last fall.

BY THE NUMBERS: Analysts surveyed by Thomson Reuters project a loss for the quarter of 11 cents per share on sales of $391 million.

ANALYST TAKE: In a note to clients in February, Citi ( C - news -people ) Investment Research analyst Catriona Fallon said the $110 million McClatchy is looking to save will probably not be enough.

"We estimate that the falloff in ad revenues will more than wipe out these savings," Fallon said, reiterating a "Sell" rating on shares.

STOCK PERFORMANCE: McClatchy's stock tumbled 39 percent during the quarter to 49 cents. The company has received notice from the New York Stock Exchange that it faces delisting if its market capitalization doesn't recover.



Anonymous said...

Is it time to at least put the champagne on ice?

Anonymous said...

Well, this certainly isn't a surprise to anyone but the KC Star tool who actually believed the BS that zieman's lacky put out the other day.

What was that again? Oh yeah, "We're covered for the rest of the year" I wonder if they were aware that the Star was in the process of secretly firing people at the very same time they were putting that crap out?

Anonymous said...

I too have heard that the cuts were made deeper to come in line with projected losses for the year.

No one really knows how bad the CA and FL papers will hurt the overall Company, however, I have heard that several, if not most of the central papers are profitable.

I would guess that the loss might be 3-6 cents a share including the one time charges (i.e. severance), and possibly a 2-5 cent a share gain not including it.

Guess we will find out in 24 hours.

Oh, and also I am glad they are "secretly firing people" as doing the LIFO method does not save them much money as cutting higher salary emps and dead wood.

Anonymous said...

tell me something new

Anonymous said...

Way back in September the production Dept. @ Modesto did their part in saving the rotten ^*&%$ over a million!

Anonymous said...

Question? Will ch 11 be filed by the end of 2009?