Dow Jones Earnings Spike on Accounting Gain, ‘WSJ’ Ad Rise

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Dow Jones & Co., publisher of The Wall Street Journal, reported sharply higher first-quarter earnings Tuesday on an accounting gain relating to litigation over its former Telerate data delivery service.

The New York-based company reported income of $61.5 million or 74 cents per share, up from $8.2 million or 10 cents per share in the same period a year ago.

The company, which also publishes Barron’s, Dow Jones Newswires and a group of community newspapers, said the results included a one-time gain of 60 cents per share as it settled litigation with a financial data provider for less than it had taken a reserve.

Without that gain or other one-time items in both periods, Dow Jones earned $11.4 million or 14 cents per share, compared with $9.5 million or 11 cents per share in the year-ago period. Analysts surveyed by Thomson Financial had been expecting 15 cents per share.

The company’s shares fell $1.10, or 2.9 percent, to $37.15 in early trading on the New York Stock Exchange.

Revenue rose 9.7 percent to $452.2 million from $412.1 million.

Dow Jones said it expects to post second-quarter earnings before special items in the mid-30 cents per share, compared to the 34 cents per share it earned in the year-ago period. Analysts had been looking for 38 cents.

The Wall Street Journal’s print edition posted a 17.9 percent gain in advertising revenue in the quarter, including its new Weekend Edition on Saturdays, but overall the company’s consumer media unit, which includes Barron’s and MarketWatch in addition to the Journal, posted a loss of $2.4 million due to costs from launching the Saturday edition. Those costs amounted to about 6 cents per share in the first quarter.

Dow Jones had previously taken an accounting reserve of $265 million in anticipation of a settlement with Cantor Fitzgerald Securities and Market Data Corporation. Dow Jones later settled the dispute and agreed to pay $202 million.

The company paid most of the settlement in the first quarter of 2006, financing it with debt. It said it would incur about $7.5 million in additional interest expense or 5 cents per share this year.

In addition to the accounting gain of 75 cents per share, Dow Jones also recorded a charge of 15 cents per share related to previously announced job cuts as part of a restructuring of its business lines. About 65 jobs were cut, the company said.

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