Dow Jones 4Q Earnings Up Big On Sale Of Ottaway Papers

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By: E&P Staff

Dow Jones & Co. Thursday reported fourth-quarter 2006 earnings of $192.9 million, or $2.30 per diluted share, a big jump over year-ago quarterly earnings of 49-cents per share that is mostly accounted for by the sale of six of its Ottaway community newspapers to Community Newspaper Holdings Inc.

Excluding the sale of the papers plus a special tax benefit and a restructuring charge, Dow Jones said, the company earned 47 cents per share in the quarter, up 14.6% from the 41 cents per diluted share earned in the fourth quarter of 2005.

Revenue for the quarter increased to $485.4 million, up 6.1% over the 2005 period, due to increased revenue at Consumer Media and Enterprise Media, including the acquisition of Factiva. Excluding Factiva, Dow Jones said, revenue was up 3.5%.

Operating income increased 12.1% over last year to $48.4 million. Excluding special items, operating income increased 47.8% to $63.7 million from $43.1 million in the fourth quarter of 2005 due to increased profits at Consumer and Enterprise Media, partially offset by a decline at Local Media, Dow Jones said.

For the full year 2006, Dow Jones said, revenue was $1.78 billion, up 6.6% over 2005. Operating income was $104.6 million compared with 2005’s $96.1 million.

Excluding special items, operating income was up 37.4% over 2005. Full year 2006 earnings were $4.64 per diluted share, compared with $0.73 per share in 2005. Excluding special items, earnings in 2006 were $1.11, up 13.3% versus $0.98 per share in 2005.

“For the fourth quarter and full year 2006, we bucked print industry trends and posted solid gains in revenue and earnings,” Dow Jones CEO Rich Zannino, said in a statement. “This performance was driven by focused execution on our transformation plan and operating initiatives, in particular our organizational restructuring, Weekend Edition, print ad sales and circulation revitalization, international print repositioning, Dow Jones Online growth, including MarketWatch, and aggressive cost management.”

Zannino said the outlook for 2007 is for “revenue growth of 18% to 20% over 2006 and EPS (earnings per share) before special items of $1.40 to $1.55, an increase of 25% to 40% over 2006.”

Dow Jones also served notice Thursday that it would no longer provide Wall Street with upfront quarterly guidance.

“Instead, the company will provide a full year outlook,” the company said. “This change is consistent with the company’s focus on long-term performance.”

Dow Jones said advertising revenue at the Wall Street Journal’s U.S. print edition increased 5.1% in the fourth quarter as a strong increase in advertising yield more than offset a 1.4% decline in linage.

Online advertising revenue increased 23.0% in the quarter. Operating income grew 217% to $34.8 million and margin more than tripled to 11.3% in the fourth quarter of 2006 due to strong profit flow-through on revenue at the print Journal and at Dow Jones Online.

Dow Jones said the number of paid subscribers to The Wall Street Journal Online grew 5.6% in the fourth quarter to 811,000.

Dow Jones said it ended the fourth quarter of 2006 with $447 million in debt compared with $669 million at the end of the third quarter 2006 and $472 million at the end of the fourth quarter of 2005.

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