NEW YORK (Reuters) - Gannett Co Inc (GCI.N) posted a better-than-expected quarterly profit as cost cutting at the largest U.S. newspaper chain helped overcome a 14 percent decline in revenue on shrinking advertising sales.
Nevertheless, shares of Gannett slipped 7 percent in pre-market trade on Monday, giving back some gains after the stock improved by 7 percent in the past month. Gannett shares have risen over 47 percent since October.
Barrington Research analyst James Goss was impressed at the results and surprised at the stock decline. He suggested it could be a reaction to the stocks run up.
“They did better than I expected,” said Goss, who rates the stock at “market perform.” “The stock has had a good move, as they have demonstrated that that they are really not on their deathbed,” he said.
The publisher of USA Today and more than 80 other daily newspapers, continues to suffer from a steep decline in print ad sales as more people get their news on the Internet. But advertising demand in the fourth quarter showed signs of life as the U.S. and U.K. economies stabilized.
Its fourth-quarter profit was $133.6 million, or 56 cents a share, compared to $4.7 billion, or $20.65 a share, a year earlier when the company took a massive writedown of more than $5 billion of its assets.
Excluding special items related to restructuring, the profit was 72 cents a share, beating the average Wall Street estimate of 64 cents, according to Thomson Reuters I/B/E/S.
Total operating revenues fell 14.4 percent to $1.5 billion.
Its publishing division’s total revenue fell 15.4 percent, while ad revenue fell nearly 18 percent.
Television revenues fell to $174.5 million from $205.6 million last year, when results were boosted by election ads. Excluding political advertisements, revenues rose 11.1 percent, driven by gains in the medical and media categories.
The company sees television revenue growth in the “very high single digits” on a percentage basis for the first quarter of 2010, compared to the first quarter of 2009, fueled in part by spending related to the Winter Olympic Games.
Gannett shares fell $1.15 to $15.00 in early trading on the New York Stock Exchange.
Reporting by Franklin Paul; Editing by Derek Caney