Playboy Enterprises (NYSE: PLA) reported a loss of $145.7 million for the fourth quarter of 2008 -- $4.37 per share on a stock that trades right around $1.50. Revenues declined precipitously, but the real reasons for the loss were impairment, restructuring and other charges totaling $157.2 million.The stock is trading up slightly today, perhaps in part because chairman Jerome Kern (not that Jerome Kern) told investors on a conference call that the company is "willing to listen" to listen to sale or merger possibilities, something that the company hadn't done under former CEO Christie Hefner's reign of terror.
I've written in the past that Playboy is an ideal candidate for a sale to a strategic buyer or private equity firm because of its powerful brand and mismanagement resulting in an extremely low stock price. Still, I'm skeptical about the prospect of a sale: The stock's dual-class voting structure puts the company's fate firmly in the hands of Hugh Hefner who, for all his charisma, has been an appallingly bad steward of shareholder value. Kern said the the company would listen to offers, but what else could he have said without risking a shareholder revolt?
The writedown effectively wipes out all of Playboy's shareholder equity, but those intangible assets were impaired whether regardless of whether they were still listed on the balance sheet. It's a tough market to go looking for a buyer and to be sure, Playboy should have done that years ago. But the company's board of directors still owes it to shareholders to explore alternatives to continued evaporation of value.
Closing Bell: When We All Love the PIIGS (NBG, SQNM, PG, ERTS, KO)
Serious Money: Cheapest Stocks List Shrinks from 26 to 21
Chasing Value: Hasbro Earnings Makes My Point
