By: Seth Sutel, AP Business Writer
(AP) Knight Ridder swung to a profit of $75 million in the fourth quarter, coming back from a loss in the same period a year ago, when the media company took charges for write-downs of Internet investments and severance costs.
Knight Ridder, the second-largest newspaper publisher in the country after Gannett Co. Inc., earned 88 cents per share in the three months ending Dec. 30, compared to a net loss of $18.9 million or 29 cents per share a year ago.
The results reported Friday were just shy of the expectations of Wall Street analysts surveyed by Thomson Financial/First Call, who expected the company to earn 89 cents per share.
The company also issued a cautious outlook for its first quarter. Gary Effren, Knight Ridder’s chief financial officer, said in a prepared statement that the company sees “no upturn” in January compared to the fourth quarter as the advertising slump continues.
“If ad revenue persists at this level, it will make first quarter 2002 comparisons particularly difficult,” Effren said.
The company’s shares were off $1.40 at $62.41 in morning trading on the New York Stock Exchange.
Knight Ridder, whose 32 daily newspapers include the San Jose Mercury News and The Philadelphia Inquirer, reported that revenues fell 16% to $733.3 million in the fourth quarter compared to $877.8 million in the same period a year ago.
In the year-ago period the company took charges for writing down the value of Internet investments and covering severance costs. Without those charges Knight Ridder earned $1.09 per share in the fourth quarter of 2000.
Like other newspaper publishers struggling to cope with an advertising slump, Knight Ridder has been cutting costs. Knight Ridder Chairman and CEO Tony Ridder said in a statement the company had cut its total staff by more than 10% over the course of 2001.
Ridder also said that the recently announced bankruptcy filing of Kmart, a frequent newspaper advertiser, caused the company to “reflect a slightly more conservative position with respect to our financial statements.”
Across the company, advertising revenues fell 12% in the fourth quarter, after taking out the effect of an extra week in the year-ago period. Including the extra week, ad revenues fell 17%.
Effren said that advertising declines in two major markets accounted for much of the drop in earnings compared to a year ago. Excluding the extra week in 2000, overall advertising revenue fell 25% in San Jose, including a 55% drop in help-wanted advertising, which “dramatically reflected the boom-to-bust reversal after the highs of the Internet frenzy,” Effren said. In Philadelphia, advertising revenues fell 14%.
For the full year, Knight Ridder reported net income of $184.8 million, down 41% from $314.4 million for all of 2000. Per-share earnings fell to $2.16 from $3.53.
Full-year revenues fell 10% to $2.9 billion from $3.21 billion in 2000.