The New York Times (NYSE: NYT) is set to report Q1 earnings on Tuesday, April 21. Don't expect a profit. In fact, I wouldn't expect much of anything. After all, we are talking about a company that makes its money off newsprint. Sad as it might be to say, newspapers are fast becoming dinosaurs in the age of digital information.
According to this source, analysts think that the New York Times will lose about $0.04 per share. That's really bad, considering that the same source says that the company was profitable in the year-ago frame, generating $0.09 per share. It isn't surprising though, is it? Not only has the recession destroyed advertising growth in all forms of media, but newspapers simply aren't looked to anymore as the first source of news. The Internet has disrupted that reputation for good.
Another problem the New York Times has is the situation with The Boston Globe. Peter Cohan recently discussed this issue. Management is sure to comment on the debacle, but I don't see an easy fix. The New York Times has taken a tough stance with unions at the Globe. Everyone's stuck between a rock and a hard place on this one. Costs have to be cut if the business is to have a fighting chance for survival.
What investors will be looking for on Tuesday is any insight into how the business model can be changed to effectively compete with online news competition from sites such as Time Warner Inc.'s (NYSE: TWX) AOL, Yahoo! Inc. (NASDAQ: YHOO), and, of course, the popular Google, Inc. (NASDAQ: GOOG) news service. Shareholders need to hear concepts more compelling than restructuring paradigms. Can online subscriptions to news truly be marketed in such a way that the consumer feels a need to sign up?
You know, though, I don't think there will be anything earth-shattering said in that regard. What can management say at this point? They just haven't got it figured out yet. One thing's for certain: I would stay away from this earnings trade. I wouldn't buy the stock either before the report or after. There's simply too much misery here with this particular turnaround situation. I've read some opinion that proffers the notion that the New York Times will meet expectations. I just don't have a lot of confidence in that belief. We'll see...
Disclosure: I don't own any company mentioned; positions can change without notice.
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Reader Comments (Page 1 of 1)
4-20-2009 @ 9:53PM
Kent said...
I believe the NYT and other news mediae need to take a hard look at the internet subscription business to become more profitable as well as a way to survive. I recently subscribed to a major newspaper's internet service and have not regretted it one bit. It contains more features and coverages than the traditional way. What prompted me to do it? Cost : newsprint media has become unbearably expensive for its readership these days. That will be the driver behind them to go the way of the internet.