Dow Jones to cut jobs as profit sinks
By ADAM PASICK
Reuters News Agency
Friday, October 11, 2002 – Print Edition, Page B7
NEW YORK -- Wall Street Journal publisher Dow Jones & Co. yesterday said third-quarter earnings dropped sharply, with no end in sight to the fall-off in spending by the Journal's mainstay advertisers in the financial services and technology sectors.
With fourth-quarter earnings predicted to be about half of what analysts expected, and Dow Jones executives warning of job cuts, double-dip recession and war, analysts said the company's near-term earnings prospects were dire.
"It sounded a bit like Armageddon," said Thomas Weisel Partners analyst Christa Sober.
"With layoffs across Wall Street, those advertisers are clearly in cost-cutting mode and are probably not focusing their budgets on advertising."
Dow Jones said it would also cut jobs to trim costs.
"I'd say there will be some reduction in work force in most parts of the company," chairman and chief executive officer Peter Kann said in a conference call.
In the third quarter, Dow Jones' net income totalled $2.4-million (U.S.), or 3 cents a share, compared with $16.7-million, or 19 cents a share, in the year-earlier period.
Excluding special items, income was $5.3-million, or 6 cents a share, down from $17.4-million, or 20 cents a share, a year ago.
On that basis, analysts on average had expected 8 cents a share, according to Thomson Financial/First Call.
Total advertising revenue fell 12.7 per cent in the quarter, to $119.3-million from $136.6-million a year earlier.
Wall Street Journal ad linage fell 12 per cent.
Dow Jones forecast fourth-quarter earnings of 15 to 20 cents a share, about half of what analysts expected.
The average Wall Street estimate was 33 cents a share, according to First Call.
Dow Jones shares closed down $1.94, or almost 6 per cent, at $31.05 on the New York Stock Exchange yesterday after earlier falling as low as $29.50.
"When we spoke to you in July, we had the sense that some of the storm clouds affecting our advertising business were beginning at least very tentatively to lift," Mr. Kann said on the conference call with analysts.
"But since then, as you see just as clearly as we do, the skies, if anything, have become stormier."
The troubles at the Journal come as other media outlets such as television have shown strong gains in advertising and other newspapers have reported a slowly improving ad climate.
A slowdown on Wall Street hurts Dow Jones on several fronts.
For example, a near total absence of merger and acquisition activity of late has reduced the number of lucrative "tombstone" ads published in the Wall Street Journal.
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