Gannett reaped $31 in EBITDA for every $100 sales in 2005 but its operating profits were only $20 for every $100 in revenues in 2009. Most companies would be tickled to have EBITDA of 20%, but that number looks fairly anemic when a business is accustomed to getting 31%.Keep in mind that we’re talking about operating income, which shows that Gannett’s media businesses are still very profitable. However, if you take into account extraordinary, one-time charges against income, the picture becomes a bit bleaker. The company incurred restructuring costs in its recent downsizing that led it to an overall loss of $4.71 billion last year, but those cuts will help make the company more profitable in the future. Also, keep in mind that the profit measure we are using is return on revenue, which topped out at $8 billion in 2006 and have plunged 30.1 percent to $5.6 billion in 2009.
Wednesday, February 3, 2010
Gannett profit falls to 20%!!!
Another sure sign of the apocalypse for newspapers came this week when the country's largest newspaper chain reported its annual earnings. Despite the rotten economy, Gannett Inc. posted operating earnings of $219.1 million on revenues of $1.1 billion. That’s a profit margin of practically 20 percent. In its extensive broadcasting division, Gannett raked it in even faster in 2009, with operating income of $79.2 million on revenue of $183.2 million, which is a whopping 43 percent rate of return. So this is good news, right? Well, not according to investors, who punished Gannett’s stock with a one-day drop of almost 9 percent following release of its earnings. As one blogger noted, it’s all about expectations, realistic or not.