By: Seth Sutel, AP Business Writer
(AP) Dow Jones & Co., publisher of The Wall Street Journal, Barron’s, and Dow Jones Newswires, reported a sharp drop in earnings before one-time items Thursday, saying the Sept. 11 attacks worsened an already bad advertising climate.
On a net basis, Dow Jones swung to a profit of $16.7 million in the third quarter, compared to a loss in the same period a year ago of $33.9 million, which was caused by a write-down of its stake in Bridge Information Systems Inc., a now-bankrupt provider of financial data and news.
Excluding the write-down a year ago as well as one-time effects in the most recent quarter including other investment charges, costs for temporary relocation following the Sept. 11 attacks and an accounting gain, the company earned $17.4 million. In the same period a year ago, Dow Jones earned a comparable $48.4 million, a decline of 64%.
Per-share earnings fell to 20 cents compared to 55 cents, edging the expectations of Wall Street analysts surveyed by Thomson Financial/First Call by 2 cents per share.
The company’s shares were up $1.04 to $45.25 in late morning trading on the New York Stock Exchange.
Revenues dropped 20.5% to $397.6 million from $500.3 million in the same period a year ago.
Speaking on a conference call with analysts, Dow Jones chairman and chief executive Peter Kann said that despite the current difficulties, several expansion projects were still on schedule, including increasing color printing capacity at The Wall Street Journal.
“The third quarter wasn’t easy, and the fourth quarter won’t be either,” Kann said. “But Dow Jones has a solid foundation.”
Dow Jones’ headquarters were located across the street from the World Trade Center and were damaged during the attacks. The company has temporarily relocated its headquarters to a technical facility in South Brunswick, N.J., and reporters from the Journal are working out of temporary offices in Manhattan.
At the same time, the company also reported that advertising linage, or volume, tumbled 46.8% on a per-issue basis at The Wall Street Journal in September. Like other major publishers, Dow Jones was affected by advertisers pulling ads in the wake of the Sept. 11 attacks. Per-issue linage was off 41.2% in the third quarter and 36.3% in the year to date.
Looking ahead, Dow Jones said that it now expects linage at the Journal to decline between 35% and 45% in the fourth quarter. Chief financial officer Richard Zannino, also speaking on the conference call with analysts, described the current advertising climate as “abysmal.”
Dow Jones also lowered expectations for its fourth quarter earnings, saying they would likely be in the range of 25 cents to 35 cents per share, excluding special items. Analysts surveyed by Thomson Financial/First Call had been expecting 64 cents per share; in the same period a year ago earnings were 83 cents a share.
For the first nine months of the year, Dow Jones reported net earnings of $66.1 million or 76 cents a share, compared to $155.3 million or $1.74 per share in the same period a year earlier. Revenues slipped 18% to $1.34 billion from $1.64 billion.