We think these results are testament to McClatchy’s ability and commitment to remain profitable despite the crippling magnitude and duration of the erosion in its core print ad business. However, print advertising still accounts for 65% of McClatchy’s revenue, leaving it exposed to the continuing cyclical and secular shifts in the media world while the company struggles to achieve a sustainable formula for success in the digital arena.
These results suggest the worst of the cyclical ad spending downturn may be in the rear-view mirror. However, a moderation in the top-line rate of decline is no substitute for the restorative powers of a vigorous and sustainable recovery in ad revenue, especially for a company with a weighty debt burden. In our view, using the budget ax to quarantine the acidic effects of declining revenues is a survival tactic, not a precursor to prosperity. With visibility for an upturn in ad spending still amorphous, we think McClatchy remains vulnerable to the head winds that are gradually reshaping its business environment.
Tom Corbett could be the next newspaper analyst to get mocked by Howard Weaver.
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17 comments:
Though their bias is to the left of Karl Marx, Castro, and Stalin, they have had a good couple of days. So let them have their exuberance, irrational as it may be, until the next shoe drops.
The only irrational exuberance is the continuing dumb bashing of McClatchy.
Morningstar Analyst is as dead wrong as all the bashers in this blog.
McClatchy will hit 5$ per share at the end of 2009. That will give you something to "comment" about going into 2010.
The stock price will hit $2.15 within the next year. Anything more than that will have to wait until the economy really and truly turns around. Hope you loaded up when I called for an earnings surprise and bump up a few weeks ago at 50 cents per share.
McClatchy and other newspaper companies will continue to lose print ad revenue and not be able to make up for it with cheap Web ads. That will lead to more layoffs, which will lead to an even crappier product. That will leader to even fewer subscribers and online users, leading to even less online revenue. It's a cycle that will not end. When was the last time you looked at, acted or or even remembered an online ad?
Was this the same analyst that thought we would have an $.08 per share loss?
Guess he is eating crow and trying to figure out how we managed (AND THE REST OF THE INDUSTRY) a profit - easily beating ALL analysts expectations.
5.00? 2.15? LOL
Well, if you really think MNI will hit $5 a share you should save up your cut of the tip money (if the waitress will share it with you) and buy lots of stock. Just think... you could be driving a 1973 Ford Pinto instead of the junker you currently have.
Go for it. Take a chance. You stand a better chance of seeing $5 a share than you do of ever finding a job with a degree in journalism or English. Good luck to you.
As 3:14 implied, how long can a company survive by showing "profit" that is the result of "less expenditure" rather than by actually taking in more revenue? It doesn't take a Rhoads Scholar to see that sooner or later, there will be nothing left to cut to continue to show profit created by "less expenditure" rather than new revenue.
Guess he is eating crow and trying to figure out how we managed (AND THE REST OF THE INDUSTRY) a profit - easily beating ALL analysts expectations.
Re-affirming a price value of ZERO is far from eating crow junior.
Now it is time for you to figure out just how many more jobs must be cut to keep up with 30% declines going forward.
Just think, if profits go up X percent when you cut Y percent of expenses, you could set your expenses to zero and your profits would be infinite.
Wait, wait he did not say anything about bias or alienating half your customers. I thought that was the reason for the companies downfall! You mean it may just be the economy? Imagine that....
Anyone who watched the rise and fall of Eastern Airlines knows that analysts are nothing more than glorified odds makers with a track record not nearly as good as Vegas oddsmakers.
ROFLMAO!!!!!!
Well, if you really think MNI will hit $5 a share you should save up your cut of the tip money (if the waitress will share it with you) and buy lots of stock. Just think... you could be driving a 1973 Ford Pinto instead of the junker you currently have.
Go for it. Take a chance. You stand a better chance of seeing $5 a share than you do of ever finding a job with a degree in journalism or English. Good luck to you.
I agree the stock will hit $5, so all those mcclatchy lovers out there should buy it by the truckload. Sell your house and buy MNI stock. cash out your 401K too.
Now it is time for you to figure out just how many more jobs must be cut to keep up with 30% declines going forward.
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You really are the slow one of the group aren't you. Let me explain budgeting 101.
Bring in more than you spend.
Q2 Brought in $365m, spent $323m.
All things being equal, if you spend $323m and bring in $365m in Q3, you have the same amount of profit.
This of course means that you had a YoY drop in revenue of 19.7% (because revenues in Q3 2k8 were $451.6m). But you are thinking oh my gosh...the sky is still falling! 20% drop in revenues - oh by the way we still profited $42m again.
To make it even easier to understand, lets fast forward to Q1 2010. Lets say that McClatchy brings in only $370m. I mean that is horrible right? Well when you compare to Q1 2k9 revenues increased 1%! Woo hoo! (that is sarcasm for the slow)
I am tired of explaining market fundamentals 101 to you guys. What you should be cheering for is revenues LESS THAN $325m as that is the new break even line for the company. Who cares what revenues were last year...as long as they keep making a profit they can survive (and yes they will use the profit to likely pay off the $170m due in 2011 - sell the parking garage and that covers it right there).
6:17pm I am with you but don't hold your breath about the usual miserable people on here. They know that it's going to turn around but they continue to spread their misery with nothing but non-factual informatio and insults (see Pinto comment). This is so typical the miserable people. When they have nothing of substance to say they just start insulting you.
I am tired of explaining market fundamentals 101 to you guys.
Jay, you don't know anything about market fundamentals so please save your lessons for the rubes on seeking alpha.
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