Playboy flips to profit, shares rise
NEW YORK (Reuters) - Adult entertainment publisher Playboy Enterprises Inc PLA.N posted a better-than-expected quarterly results on Tuesday and said it shored up the performance of its U.S. television business.
Playboy shares surged 6 percent on the New York Stock Exchange as the company also posted strong revenue from licensing its brand of carefree bachelor life, despite declining circulation and advertising at its flagship Playboy magazine.
Playboy's second-quarter net profit was $1.9 million, or 6 cents a share, compared with a loss of $3.3 million, or 10 cents a share, a year ago. Revenue rose 6 percent to $85.7 million.
Analysts on average had forecast the company would break- even on an earnings per share basis, before special items, on revenue of $84.9 million, according to Reuters Estimates.
Results were helped by a 4 percent increase in U.S. TV revenue, one of its largest businesses. International TV revenue rose 16 percent and licensing sales grew 36 percent.
Those rises overshadowed a 3 percent decline in advertising and an 8 percent drop in circulation at the namesake Playboy magazine. The company expects the magazine's third quarter ad revenue would rise about 5 percent.
"It's not a growing business," Playboy Chief Executive Christie Hefner said in a telephone interview. "We've been enjoying double-digit growth from electronic entertainment and licensing. That means the percentage contribution from publishing will decline over time.
"We expect that the domestic TV business will remain stable, while international TV and online will show year-over- year revenue growth," she added, referring to the second half of 2007.
The company expects losses for its publishing group from weaker advertising, while its licensing business will show growth of 20 percent to 25 percent in revenue and profit in 2007 from a year ago.
"The growth in online ad sales will continue to put something of lid on the potential for growth in print ad sales," Hefner said, adding the company has combined its print and online groups to adapt to the change in readership.
Licensing accounts for 13 percent of the company's overall revenue. The publishing arm accounts for 26 percent.
Playboy has also entered a venture with Macao Studio City to open a Playboy Mansion entertainment center in Macau, expected in late 2009. The company said on Tuesday the site would likely bring in $4 million in revenue annually.
Playboy shares were up 64 cents at $10.92 in afternoon trading.
(Reporting by Michele Gershberg, editing by Derek Caney)
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