Chicago, IL – October 23, 2009 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: The New York Times Company (NYT), Washington Post Company (WPO), Journal Communications (JRN), Gannett Co. (GCI) and McClatchy Company (MNI).

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Here are highlights from Thursday’s AnalystBlog:

NY Times Beats Zacks Consensus

Amid the secular and cyclical slowdown in print advertising The New York Times Company (NYT) recently reported third-quarter 2009 results that topped the Zacks Consensus Estimate.

The New York Times quarterly earnings of 16 cents a share surpassed the Zacks Consensus Estimate of 2 cents, and the prior-year quarter earnings of 5 cents. The better-than-expected results came on the heels of significant cost-cutting measures and newspaper price increase.

On a reported basis, including one-time items, the company reported a loss of 25 cents a share, a substantial improvement from the loss of 74 cents delivered in the year-ago quarter.

Management now expects to save $475 million in operating costs in 2009 up from $450 million previously anticipated. Operating costs fell 21.6% to $490 million, whereas operating profit surged 30.2% to $80.6 million.

Total revenue dipped 16.9% to $570.6 million, primarily due to lower print advertising. Total advertising revenue tumbled 26.9% to $291 million, whereas circulation revenue rose 6.7% to $240.8 million due to higher subscription and newsstand prices.

Like The New York Times, other newspaper companies like Washington Post Company (WPO), Journal Communications (JRN), Gannett Co. (GCI) and McClatchy Company (MNI) have long been grappling with the slump in print advertising demand amid the global meltdown, as advertisers are migrating to the Internet driven by increasing online readership and lower ad prices than print.

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Stocks swung between gains and losses and volume remained light.  Treasury prices declined, with the 10-year off 4/32 and the corresponding yield rising to 3.293%.  The Dow Jones industrial average lost 47 points, or 0.5%. The S&P 500 index lost 2 points, or 0.2%. The tech-heavy Nasdaq composite retreated 2 points, or 0.2%.  On the New York Stock Exchange, 1.18 billion shares exchanged hands with losers narrowly ahead of winners.

The greenback showed modest gains against a basket of currencies, closing at its highest level in three weeks, up 0.1%. Crude prices retreated 13 cents to $66.74 on demand issues.

Meanwhile, technology shares retreated from their year highs.  As the group the shares fell 0.7%.  Cisco (NASDAQ:CSCO), the biggest maker of networking equipment, lost 1.3% to $23.30 and Intel (NASDAQ:INTC), the largest producer of semiconductors, retreated 1.3% to $19.48.

Notable gainers included Walgreen Co. (NYSE:WAG) and Gannett Co. (NYSE:GCI).  Walgreen Co. (NYSE:WAG) jumped 9.2% to $37.35, after the second-largest U.S. drugstore chain reported better-than-expected fourth-quarter per-share profit on the back of higher prescription-drug sales.  Gannett Co. (NYSE:GCI) led the gainers on the S&P 500, rallying 18%, after the largest U.S. newspaper publisher said it sees third- quarter earnings above analysts’ forecasts and announced a plan to offer $400 million of senior notes.

Talks of exit strategies also gained ground.  Dallas Fed President Fisher, almost endorsing recent comments from Fed Governor Warsh, cautioned that the Fed should start removing stimulus measures as soon as the recovery gains "traction."  Philadelphia Fed President Plosser talked about the possible need for "aggressive" moves by the Fed in the future to contain inflation.  Release of the IMF's twice-yearly Global Stability Report showed a $600 billion drop in expected financial system losses to $3.4 trillion.  However, the report also cautioned, "Even so, credit channels are still impaired and the economic recovery is likely to be slow."

Today's calendar shows Atlanta Fed President Lockhart, notably hawkish, speaking on the US outlook at 2:30 ET and Vice Chairman Kohn discussing exit strategies at 4:35 ET.     

Recently, on July 2, 2009, the company announced that it would lay off 1,400 employees or about 3% of its headcount this month at its publishing division. Gannett announced that each of its markets will complete its own downsizing plan depending on local conditions.

On July 9, 2009, the Courier-Journal newspaper operating in the Louisville market laid off 44 employees, or 7% of its work force, as part of the company’s downsizing plan. Earlier, 51 employees were laid off in December 2008. The Arizona Republic newspaper operating in Phoenix lowered its headcount by 100.

The company also started executing its plans to eliminate 106 full-time and 19 part-time positions at its six New Jersey newspapers because of the depressed economy. Last year in December, the company reduced more than 200 positions at its New Jersey newspapers. The Cincinnati Enquirer, another newspaper operating in Cincinnati, announced a layoff of 101 employees.

Like Gannett Co., other newspaper companies like Washington Post Company (WPO), E.W. Scripps Company (SSP), McClatchy Company (MNI), Journal Communications (JRN), News Corporation Limited (NWS) and The New York Times Company (NYT) are all struggling to survive in the turbulent economy. The overall industry outlook appears gloomy with no sign of improvement near term as advertising demand worsens and readers migrate to the Internet and alternative media.

The Zacks Rank for GCI stock is #4 (Sell). Yesterday the stock closed at $3.19.

Standard & Poor's Upgrades McClatchy's Corporate Rating

On Tuesday June 30, 2009, Standard & Poor's raised its corporate credit rating for newspaper publisher McClatchy (MNI) to "CC" (highly vulnerable) from "SD," (selective default). The rating agency still holds a negative view on the company on account of its possible restructuring.

Last Friday, June 26, both Standard & Poor's and Moody's Investor Services had lowered their corporate ratings on the company following the debt exchange offer announced by McClatchy. Moody's lowered its corporate rating to "Caa2" from "Caa1", whereas Standard & Poor's lowered its credit rating to "SD" from "CC." McClatchy offered to pay $60 million in cash and issue $175 million in new notes, with a 15.75% coupon rate due 2014, to replace $1.15 billion in debt owed to its bondholders.

The reason behind downgrading was the company's dubious ability to repay debt and high default risk. On the announcement of the completion of the debt exchange offer on June 26, only $102.9 million in debt had been tendered, (approximately 9% of $1.15 billion).

The recent marginal amendment to "CC" from "SD," by Standard & Poor's was based on McClatchy's announcement that it exchanged $24.2 million in new senior notes and $3.4 million in cash, for a total of $102.9 million of senior notes.

McClatchy like other newspaper companies - The New York Times Company (NYT), Washington Post Co (WPO), Gannett Co (GCI) and Journal Communications (JRN) is in the midst of a secular and cyclical slowdown in print advertising. McClatchy, in a race for survival, is building its Internet operations, cutting costs, reducing its debt burden and has recently suspended its dividend.

However, postponement of $190 million land sale erodes visibility to any relief. We maintain a Sell rating on the stock with a six-month target price of $0.50.

On Friday June 26, 2009, McClatchy (MNI) announced the expiration of its private exchange offer, which commenced on May 21, 2009. The company offered to exchange the Old Securities for up to $60 million in cash and up to $175 million of newly issued 15.75% Senior Notes due 2014.

The coupon rate has substantially increased from the range of 4.625%-7.150%. With the increase in coupon rate, the company's interest coverage ratio which stood at 2.8x (EBITDA/Interest expense) will decline, and may fall below the covenanted minimum interest coverage ratio of 2.25x. The company's leverage ratio (Debt/TTM EBITDA) was 5.9x at the end of 1Q09 up from 5.1x at the end of 2008, approaching recently-amended bank covenants of 6.25x.

After the expiration of the offer, according to Global Bondholder Services Corporation, the depositary for the Exchange Offer, $102.9 million in debt had been tendered. McClatchy received tenders from holders of approximately $3.8 million total principal amount of 2011 Notes, $11.1 million total principal amount of 2014 Notes, $53.4 million total principal amount of 2017 Notes, $10.8 million total principal amount of 2027 Debentures and $23.8 million total principal amount of 2029 Debentures.

The company will exchange the tendered notes for $3.4 million in cash, in the case of the 2011 and 2014 Notes, and $24.2 million in new notes. On Friday, MNI's shares fell $0.22 and closed at $0.46 cents.

McClatchy like other newspaper companies - New York Times Co. (NYT), Washington Post Co. (WPO), Gannett Co. (GCI) and Journal Communications (JRN) is in the midst of a secular and cyclical slowdown in print advertising.

Circulation revenue for the company declined for the third consecutive year (down 16% in 2008) but showed a marginal increase of 0.9% in 1Q09, while ad revenue sank disproportionately as one-third of the company's revenues come from the hard-hit California and Florida markets.

In order to survive, McClatchy is venturing into building its Internet operations, cutting costs, reducing its debt burden and has recently suspended its dividend. We maintain a Sell rating on the stock with a six-month target price of $0.50.

Gannett Co. (GCI) shares rallied on Monday in spite of speculation that the biggest U.S. newspaper publisher would mark the beginning of what is expected to be a season of terrible earnings for the industry later this week.

In the latest round of cost-cutting initiatives to offset dwindling revenue, the company revealed earlier today that it would stop or merge the publication of several non-daily newspapers in Oakland County on May 31. The closings and consolidations would affect 44 jobs.

While Gannett`s flagship publication USA Today had been showing some resilience in the recession, the worst of the industry slump has finally started making its way into sales as well. Gannett executives recently forecast a 35% fall in first-quarter ad revenue from the year-ago period. The consensus estimate for the company's quarterly earnings is pegged at 25 cents per share.

Against this backdrop, Ariel Investments LLC more than doubled its stake in the company last Thursday. Amid the consolidation spree in broader markets, Gannett shares gained nearly 7% to $4 at noon on the New York Stock Exchange.

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