Merrill Lowers Estimate on McClatchy

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By: Jennifer Saba

Merrill Lynch lowered its earnings per share estimate of McClatchy in a note this morning by 10% to $2.12 per share in 2007 and $2.19 per share in 2008, based on McClatchy’s weak February results.

The research firm readjusted its advertising revenue forecast for the company calling for a 3.7% decline in pro forma ad revenue for the year, compared to the original 2% drop.

And even still, analysts are cautious since classified real estate seems to be tanking — McClatchy in particular has tough comparisons heading into this year. The company reported that real estate fell 15.4%.

Goldman Sachs is also alarmed by the state of classified advertising, especially given that the ad category was one of the few positives going for the industry.

In a note released this morning on McClatchy, analysts wrote, “Ad revenue declines have reached levels not seen in non-recession years. Despite Herculean efforts by publishers, virtually no amount of cost cutting or newsprint price decreases could yield earnings growth given this level of revenue decline.”

Goldman Sachs and Merrill Lynch both maintained a “neutral” rating on McClatchy.

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