By: Gannett Co., the largest U.S. newspaper publisher, is scheduled to report its second-quarter results before the stock market opens Wednesday. The following is a summary of key developments and analyst opinion related to the period.
OVERVIEW: Analysts expect another drop in revenue for Gannett, with advertising markets still in a deep slump. Results from the McLean, Va.-based company should offer a preview of the next few weeks, when The New York Times Co., McClatchy Co. and other publishers report earnings.
Gannett is perhaps the most financially sound company in the newspaper business, with debt at apparently sustainable levels and operations that are still profitable.
But like most publishers, Gannett is watching revenue from print newspaper advertising dry up quickly, and digital ads are not making up the shortfall.
The recession has quickened the declines and even hurt ad revenue at the company's broadcast stations.
As a result, Gannett has resorted to painful cuts to bring down costs. This month Gannett announced 1,400 layoffs in its hard-hit U.S. community publishing division, which does not include the flagship USA Today newspaper. The cutbacks follow a 10 percent cut announced last October.
Other cost saving moves came earlier this year, including mandatory unpaid furloughs. Gannett also slashed its dividend 90 percent in February and expects to save $325 million annually with the move.
But the weak economy continues to pressure the company. Bob Dickey, who heads the publishing division, told staff in a letter this month that "there have been some promising signs of a recovery, but the reality is the improvements are not broad-based and the economy continues to be fragile."
BY THE NUMBERS: Analysts polled by Thomson Reuters, who typically exclude one-time losses or gains, expect Gannett to report earnings of 36 cents per share on revenue of $1.46 billion.
ANALYST TAKE: Barrington Research Associates analyst James Goss expects another painful quarter for Gannett's newspapers. He projects advertising revenues declined more than 30 percent year-over-year. The division saw a 34 percent slide in the first quarter.
WHAT'S AHEAD: Few expect newspapers to mount a full recovery. But any improvement in the economy would help reveal how much of the damage is cyclical and how much is a part of the broader shift brought on by the Internet.
"If we do get some economic improvement, maybe we can start to sort out what is what," Goss said.
STOCK PERFORMANCE: Gannett's stock rebounded from March lows over the second quarter, climbing $1.37, or 62 percent, to $3.57.
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