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The New York Times Company Reports a Drop in Profit

April 25, 2013 by Leave a Comment

Amid the ongoing changes in the industry, the company also announced plans to introduce lower-cost subscription models, part of a broader growth strategy detailed on Thursday.

The company is remaking itself in the face of the struggles in both print and online advertising. In the first quarter, net income was $3.1 million, or 2 cents a share, down from $42.1 million, or 28 cents a share, in the period a year earlier. Income from continuing operations declined to $3.1 million from $8.7 million a year earlier.

Total revenue from the quarter declined 2 percent to $465.9 million. Over all, the company’s advertising revenue declined 11.2 percent to $191.2 million from $215.5 million. Print advertising at the company’s newspapers, which include The New York Times, The Boston Globe and The International Herald Tribune, shrank 13.3 percent. Digital advertising revenue declined 4 percent.

In a continuing bright spot for the company, circulation revenue grew by 6.5 percent as The New York Times stepped up its digital subscription initiatives and raised prices for its print edition. The number of paid subscribers to the Web site, e-reader and other digital editions of The Times and The International Herald Tribune grew to 676,000, a jump of almost 49 percent from the same quarter the year before. Digital subscriptions to The Boston Globe and BostonGlobe.com rose more than 50 percent compared to the same time the year before, to 32,000 subscribers.

“Our first-quarter results reflect our continued strides in reshaping The New York Times Company,” Mark Thompson, the company’s president and chief executive officer, said in a statement. “We will be rolling out other strategic initiatives designed to further leverage The Times brand and newsroom to create new products and services for a wider range of customers, domestically and around the globe.”

At the same time the company released its quarterly earnings, it unveiled more details about a growth strategy that it will introduce in the fourth quarter of this year and early next year. Mr. Thompson said that the company planned to provide more varied subscription plans that would allow readers to pay less for access to “The Times’s most important and interesting stories” or to content in politics, arts or food. For avid readers of The New York Times, a premium subscription would include services like access to events at The Times. The company also plans to get more involved in brand extensions, like games and e-commerce, and growing its conference business to bring in more revenue.

“We want to deepen our relationship with our existing loyal customers, but we also want to use a wider family of New York Times products to reach new customers both here and around the world,” said Mr. Thompson. “The initiatives we are announcing today should be seen as a significant first step in our effort to put The New York Times Company on a path to sustainable growth.”

In recent years, the company has been trying to pare down its assets to focus exclusively on its flagship, The New York Times. In 2012, the company sold its regional newspapers to Halifax Media Holdings. It also sold its remaining stake in the Fenway Sports Group. In the fourth quarter, the company benefited from a $164.6 million gain for selling the company’s stake in Indeed.com, a jobs search engine, and the sale of About Group, the online resource company, for $300 million.

The sales are expected to continue. In February, the company announced plans to sell the New England Media Group, which includes The Globe, Boston.com, The Worcester Telegram Gazette and Globe Direct, a direct-mail marketing company. Days later, the company said it would rename The International Herald Tribune as The International New York Times and said it planned to introduce a redesigned Web site that catered to international audiences. The rebranding is expected to happen in the fourth quarter of this year.

Times executives said they remain hopeful that the economy will pick up later this year. The company expects total circulation revenues to grow by the mid-single digits in the second quarter. Total advertising revenue should improve as well, the company projected.

Article source: http://www.nytimes.com/2013/04/26/business/media/times-company-reports-a-drop-in-income.html?partner=rss&emc=rss

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Netflix Regains 600,000 U.S. Subscribers

January 25, 2012 by Leave a Comment

SAN FRANCISCO (AP) — Netflix has regained most of the U.S. customers it had lost following an unpopular price increase, signaling that the video subscription service is healing from its self-inflected wounds.

Fourth-quarter figures released Wednesday show Netflix Inc. ended December with 24.4 million subscribers in the U.S. That was up 600,000 from 23.8 million at the end of September. That means Netflix regained about three-quarters of the 800,000 it lost last summer after raising its U.S. prices by as much as 60 percent.

The subscriber uptick is a positive sign for Netflix after several months of upheaval that battered its stock.

The fallout contributed to a 14 percent decrease in Netflix’s fourth-quarter earnings.

Netflix made $40.7 million, or 73 cents per share, in the final three months of last year. That compares with income of $47.1 million, or 87 cents per share, a year earlier.

Investors had been bracing for a bigger drop-off. The company’s performance easily exceeded the average earnings estimate of 54 cents per share among analysts surveyed by FactSet.

Fourth-quarter revenue climbed 47 percent from the previous year to $876 million — $19 million above analyst projections.

Netflix’s stock soared $12.97, or more than 13 percent, to $108.01 in extended trading. During the regular session, it increased $2.37, up 2.6 percent.

The stock still has a long way to go to return to its peak of nearly $305, which was reached in July, about the same time that Netflix announced the price increase that outraged customers.

But the fourth-quarter results should help bolster confidence in Netflix CEO Reed Hastings, who had been skewered in Internet forums and analyst notes for miscalculating how subscribers would react to higher prices.

A contrite Hastings had promised that Netflix would work to lure back customers, and it managed to do so better than he had forecast.

Netflix expects its comeback to gather more momentum in the current quarter.

The company, which is based in Los Gatos, Calif., forecast that it will add 1.7 million U.S. subscribers to a service that streams video over high-speed Internet connections. That would be in line with how many streaming subscribers signed up in last year’s first quarter.

Netflix ended 2011 with 21.7 million streaming subscribers in the U.S. and another 1.9 million in Canada and Latin America. This month, Netflix introduced streaming plans in the United Kingdom and Ireland, too.

Most of the streaming gains will be offset by cancellations of DVD-by-mail rental plans, which Netflix is gradually phasing out. Hastings believes discs are becoming increasingly antiquated as technology advances. Netflix predicted its DVD subscriptions will fall from 11.2 million in December to 9.7 million in March. The company lost 2.8 million DVD subscribers in the fourth quarter.

While Netflix sees its emphasis on streaming as a smart long-term strategy, the DVD attrition will hurt the company’s financial performance this year. That’s because Netflix’s recent price increases made delivering discs through the mail more profitable, at least for now. Part of the reason is because Netflix is paying higher fees to obtain the streaming rights to exclusive programming, as well as video already available in other outlets and formats.

Netflix expects those factors to produce an annual loss this year, the first time that has happened in a decade. The company gave the first inkling at how big the setback will be with its first-quarter projections. The company predicted a loss of 16 cents to 49 cents per share.

The average analyst estimate called for a first-quarter loss of 29 cents per share.

Netflix projected first-quarter revenue of $842 million to $877 million. Analysts expect revenue of $849 million.

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DealBook: Citigroup Profit and Revenue Decline for Quarter

January 17, 2012 by Leave a Comment

Vikram S. Pandit, chief of Citigroup.Andrey Rudakov/Bloomberg NewsVikram S. Pandit, chief of Citigroup.

Citigroup reported an 11 percent drop in quarterly earnings on Tuesday, well below the Wall Street consensus, and revenue fell 7 percent, underscoring the industry’s slump in investment banking and slow growth in lending.

The profit for the fourth quarter was $1.16 billion, or 38 cents a share. Analysts had been expecting earnings of 50 cents a share, according to Zacks Investment Research. For the year, the bank reported earnings of $11.3 billion, compared with $10.6 billion in 2010.

Results in the year-ago period, when Citigroup posted profit of $1.3 billion, or 43 cents a share, had been helped by sizable accounting gains on the value of Citigroup debt, which were mostly absent from the fourth-quarter results for 2011.

The capital markets unit, which includes helping companies raise money and make deals, was especially weak; revenue in the division fell 10 percent, to $3.2 billion.

For the full year, Citigroup reported net income was up 6 percent from 2010, one measure of progress in the company’s slow but steady recovery under its chief executive, Vikram S. Pandit, who has been trying to transform Citi from a sprawling but shaky global banking giant into a stronger, more nimble corporate lender.

In the wake of the financial crisis, Citigroup required a $45 billion bailout from Washington, and while that has been paid back, Mr. Pandit is still in the process of shedding assets and lightening the bank’s balance sheet.

Net credit losses in the fourth quarter declined 40 percent, to $4.1 billion, from the period a year earlier, a sign that consumer conditions appeared to be getting stronger.

Like other battered financial giants, including Bank of America, Citigroup’s shares have been surging recently on hopes that the financial crisis in Europe might be easing and the economic recovery in the United States is gaining steam. Since the end of November, Citigroup’s shares have risen from below $25 to just over $30.

Despite the optimism among investors, Mr. Pandit sounded a note of caution.

“The current environment is certainly challenging,” he said in a letter to employees. “We’ve shown that we can weather a tough environment without investors, regulators and other observers questioning our safety and soundness.”

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I.B.M. Exceeds Earnings Estimates and Raises Its Profit Forecast

April 20, 2011 by Leave a Comment

The giant supplier of corporate technology delivered first-quarter results on Tuesday that fit the pattern — with a bit extra as profit and revenue exceeded Wall Street’s expectations.

I.B.M. also raised its forecast for operating profit for the year, to “at least $13.15” a share. The earlier guidance was for “at least $13” a share.

In a statement, Samuel J. Palmisano, I.B.M.’s chief executive, said the company saw “excellent momentum” in areas it had pegged for higher growth, including business intelligence software and emerging markets abroad.

I.B.M. reported that net income rose 10 percent in the quarter to $2.9 billion. Its earnings rose more, by 17 percent, to $2.31 a share, reflecting fewer shares outstanding as a result of the company’s stock repurchase program. And its operating earnings, the figure tracked most closely by Wall Street analysts, rose 21 percent to $2.41 a share.

The earnings performance easily surpassed the average estimate by analysts of $2.30 a share, as compiled by FactSet Research.

The company reported revenue of $24.6 billion, an increase of 5 percent, after adjusting for currency gains. The sales figure was above Wall Street’s average estimate of $24 billion. In the year-earlier quarter, I.B.M. had revenue of $22.9 billion.

I.B.M. had strong results in most of its businesses, including hardware, as a new generation of mainframes sold strongly. Revenue from the big computers was up 41 percent from a year ago.

The one question mark, analysts said, was lower than expected new contract signings in the company’s big services business, a possible indication of weakness ahead.

“It was a classic I.B.M. quarter, showing the company’s ability to produce solid earnings,” said A. M. Sacconaghi, an analyst for Sanford C. Bernstein Company. “The only concern is the soft services signings.”

I.B.M.’s quarterly performance, analysts said, was another nod to the success of a strategy begun long ago. That strategy emphasizes profits ahead of revenue growth, aggressively pursuing high-growth markets overseas, and offering customers a tightly integrated bundle of hardware, software and services. And I.B.M. has an unwavering focus on the corporate and government markets.

For more than a decade, I.B.M. has delivered gains in earnings per share of more than 10 percent, while revenue has increased about 3 percent a year.

Cost cutting and share buybacks are part of the answer, analysts say, but so is the steady move into higher-margin businesses and new markets. These include applying research and computing to help governments tackle challenges like traffic management, water conservation and energy use. Last week, for example, I.B.M. announced a deal with the California Department of Transportation to build systems for predicting and managing traffic.

Technology markets are known for rapid, unpredictable turns. Yet I.B.M. issues five-year plans and pretty much sticks to them. The current plan, running to 2015, singles out a few market niches for high growth.

One sector earmarked for growth is cloud computing, the technology industry’s buzz term for tapping into computing resources and information in big data centers remotely over the Internet from anywhere, as if the services were in a cloud. I.B.M forecasts that its cloud business will reach $7 billion by 2015.

Another market singled out for rapid expansion is the business of helping companies mine data for useful information such as using Web traffic and social-network postings to guide marketing, sales, manufacturing and purchasing decisions.

The software for mining vast data troves is called business intelligence or analytics software. In the last five years, I.B.M. has spent $14 billion acquiring 25 specialist companies in analytics. The company’s analytics unit now employs 8,000 consultants and 200 mathematicians.

“The biggest change facing corporations is the explosion of data,” said David Grossman, an analyst at Stifel Nicolaus. “The best business is in helping customers analyze and manage all that data, and I.B.M. is making a big push there.”

In a conference call, Mark Loughridge, the chief financial officer, described Watson, I.B.M.’s Jeopardy-playing supercomputer, as a triumph of the company’s skills in analytics. In February, Watson beat two human Jeopardy champions. “We didn’t invest just to play Jeopardy,” he said. “We invested to provide leadership applications for our clients.”

I.B.M. said its analytics business grew 20 percent in the quarter. The 2015 goal for that business is $16 billion.

I.B.M. has a large business in Japan, about 11 percent of its total revenue, or more than $10 billion a year. Yet despite the exposure to Japan, I.B.M. had little impact in the first quarter from the tsunami and earthquake on March 11. Three-quarters of I.B.M.’s business in Japan is in services, which are typically sold under contracts lasting a year or more. “Services tend to be more stable in turbulent times,” Mr. Loughridge said.

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