UPDATE 4-Gannett shares tumble as revenue comes up short

* Q2 EPS 81 cents versus 30 cents

* Revenue declined to $1.37 bln vs analyst view $1.40 bln

* Publishing revenue declined 6 percent

* Shares down 8.4 percent to $13.84

(Adds more executive and analyst comments)

By Jennifer Saba

NEW YORK, July 16 (BestGrowthStock) – Gannett Co Inc’s (GCI.N: )
second-quarter profit (Read more your timing to make a profit.) rose but the nation’s largest newspaper
publisher reported an unexpected declined in revenue that helped
send its shares tumbling as much as 11 percent.

Shortly after the quarterly report on Friday, Gannett topped
the list of the biggest decliners on the New York Stock Exchange.
Shares later recovered some ground, but were still down around 8
percent and weighing on other publishers.

The New York Times Co (NYT.N: ) traded 6.9 percent lower while
McClatchy Co (MNI.N: ), parent company of The Miami Herald and The
Sacramento Bee, was down 6.7 percent.

Gannett, whose profit surpassed forecasts on Wall Street, said
revenue slipped by about 1.5 percent to $1.37 billion in the
second quarter, with publishing revenue down 6 percent. Analysts
on average had expected revenue of $1.40 billion, according to
Thomson Reuters I/B/E/S.

As for the marked stock decline, Barry Lucas, senior vice
president of research at Gabelli & Co, said that “part of it is
the perception of a revenue miss despite that earnings were ahead
of consensus.” Gabelli & Co is an affiliate of GAMCO, which owns
some Gannett stock.

Benchmark Co analyst Edward Atorino said Gannett stock took a
hit largely because the company did not provide guidance. “On Wall
Street ‘Guidance is King;’ if you don’t give guidance, people get
worried,” he said.

Instead, Gannett executives emphasized improving trends at its
newspaper division and a jump in broadcast revenue due to
automotive advertisers opening up their coffers.

“We are seeing encouraging revenue trends in all of our
segments,” said Gracia Martore, president and chief operating
officer, during a conference call.

Executives also said they were focusing on growing digital
opportunities. As part of that, Gannett announced on Friday an
advertising partnership with Yahoo Inc (YHOO.O: ) that involves
Gannett using Yahoo’s advertising platform to sell local ads for
its newspaper and TV station websites.

Gannett’s digital revenue grew 8 percent to $154 million in
the second-quarter.

The drop in Gannett’s share price is “overshadowing some of
the really positive commentary related to specific operations,”
said Gabelli’s Lucas. “There are some real green shoots.”

The company posted a 20 percent gain in broadcasting revenue
to $184 million due to a 60 percent jump in automotive advertising
at its television stations.

At its newspaper division, Gannett executives said that
advertising revenue declines were moderating compared to the
previous quarter. At its U.S. properties, including USA Today,
advertising revenue fell almost 5 percent year-over-year compared
to an 8 percent drop in the first-quarter.

Even classified advertising’s decline is beginning to moderate
with a decrease of 3 percent in the second quarter at its U.S.
newspapers as companies begin to hire and auto dealers seek out

Executives said that while they are keeping an eye on the
economy given the uncertainty in the past weeks, they have not yet
noticed a pull-back in advertising spending.

Still, Martore and Chief Executives Craig Dubow indicated that
a stock repurchase program — a hallmark of Gannett during the
1980s and 1990s — will not likely come in the short term. “The
key is to keep our powder dry,” said Dubow, adding Gannett is
keeping its eye out for digital acquisitions to help boost

But much of the improvement in quarterly earnings was due to
cost cutting with expenses. Overall, second-quarter net income
rose to $195.5 million, or 81 cents per share, from $70.5 million,
or 30 cents a share, in the same quarter last year.

Excluding items, it posted earnings of 61 cents a share,
compared with analysts’ expectation of 53 cents.

The better-than-expected profit caused some analysts to
question the depth of the sell-off in Gannett’s stock.

Douglas Arthur, an analyst with Evercore Partners, said: “On
balance, it looks good to me,” but Gannett was apparently falling
victim to the broader stock market decline.

“Any way you slice it, I’m surprised in the weakness in

Shares of Gannett were down $1.27 at $13.84, after earlier
dropping as low as $13.43.
(Reporting by Jennifer Saba; Editing by Gerald E. McCormick, Phil

UPDATE 4-Gannett shares tumble as revenue comes up short