Apr 13, 2006 2:05 pm US/Central
McClatchy 1Q Profit Falls 14 Percent
NEW YORK (AP) ―
The McClatchy Co., a newspaper publisher which is buying Knight Ridder Inc., posted first-quarter results Thursday that were well below analysts' expectations, sending its stock down nearly 5 percent.
McClatchy, which is based in Sacramento, Calif., earned $27.7 million, or 59 cents per share, for the quarter ended March 26, down 14 percent from $32.3 million, or 69 cents per share, in the same period a year ago.
The results were well below the 67 cents per share estimate of analysts polled by Thomson Financial. Investors were disappointed with the results, and sent the company's shares down $2.29, or 4.8 percent, to $45.71 in heavier-than-usual trading Thursday afternoon on the New York Stock Exchange.
McClatchy's shares, which were already under pressure since the company's March 13 announcement that it would acquire the much larger Knight Ridder, fell through their previous 52-week low of $47.43.
Revenues edged up 0.4 percent to $282 million from $280.9 million, with advertising revenues rising 1.4 percent while circulation revenues declined 4.5 percent.
The company said automotive and national advertising were weaker in the period. McClatchy said it doesn't expect any change in the sluggish automotive category, and national advertising remains unpredictable, although real estate advertising has been solid.
Like many other companies, McClatchy began expensing the costs of stock compensation in the first quarter in compliance with new accounting regulations. Excluding the $2.3 million in stock expenses, earnings would have been 62 cents per share, the company said.
Those costs together with higher expenses for newsprint, pension and medical costs more than outweighed the increase in revenues in the quarter.
"We look forward to better things going forward," CEO Gary Pruitt told investors on a conference call.
Pruitt said the company was still hoping to close its deal to acquire Knight Ridder on July 1. However, he declined to give a specific comment on the ongoing process to market the 12 Knight Ridder newspapers that McClatchy intends to sell.
Pruitt has said he wants to reach deals for the papers as quickly as possible and hopefully close the transactions at the same time as the Knight Ridder deal. McClatchy said the papers don't meet its acquisition criteria, which include being located in rapidly growing cities.
McClatchy publishes 12 newspapers in California, the Carolinas and the elsewhere, including the Star Tribune of Minneapolis, The Sacramento Bee and The Fresno Bee.
(© 2006 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
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