Hardly a Good Word at New York Times

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What's the good word? There doesn't seem to be much of one these days for many newspaper companies reporting second-quarter earnings, and New York Times (NYSE: NYT) joined the crew. In reporting on its quarter, it also said it would reduce its newspaper size and cut more staff, and its chief financial officer is retiring.

Second-quarter profit came in flat at $0.42 per share, or $61.3 million, as New York Times dealt with high costs; the results included a $0.04 per-share charge associated with staff cuts announced last September. Total sales inched up only about 2% to $858.7 million. Operating profit decreased 7% to $99.1 million.

New York Times said it will reduce the size of its print newspapers to pare down expenses, as other newspaper companies have done, including Washington Post (NYSE: WPO) and Dow Jones (NYSE: DJ), which plans a similar strategy for its flagship Wall Street Journal (and it's hardly any surprise given the fact that print newspapers are losing a lot of ground to online equivalents). New York Times also said it will close printing operations at a plant in New Jersey and cut 250 more jobs.

This bears a striking resemblance to New York Times' first-quarter news, when Foolish colleague Stephen Simpson examined its troubles. The challenges obviously continue for this venerated newspaper company.

It's worthwhile to note that New York Times' About.com Internet property contributed a bright spot to the results; About.com's second-quarter revenues skyrocketed by 63% to $19.4 million, with operating profit up 192% to $7.3 million. The company said that About.com should contribute to earnings this year. New York Times' overall Internet properties represented 7.7% of second-quarter revenues, compared with 5.8% in the same quarter last year. This is also no surprise; many newspapers seem to see the writing on the wall when it comes to the increasing strength of digital products in light of print products' challenges.

Ironically, perhaps, newspapers' woes make good headline fodder here lately; their biggest challenge is to evolve given rapid changes in the way that consumers take in news and information, particularly given migration to the Internet. Just Monday, I wrote about Dow Jones' initiatives to examine its online operations, reduce duplicated efforts, and put emphasis on differentiated content. The latest earnings have featured quite a few lackluster results -- cases in point include Tribune (NYSE: TRB) and Gannett (NYSE: GCI), which publishes USA Today.

It's understandable that some investors might be looking for values in the beleaguered industry, but it might still be too soon to tell the winners from the losers. Personally, I'd prefer those that have healthy online operations and an innovative eye toward change that will help offset challenges on the print side, but judging by a quick peek at New York Times' P/E ratio of 18, it doesn't seem compelling enough to dig further at the moment, given the industry's challenges for growth. Even given cost-cutting efforts, there are still tough times ahead for New York Times and many of its peers.

Extra! Extra! Read all about it:

• Dow Jones scoops for news strategy.
• Is Dow Jones a value or a value trap?
• Why one Fool thinks a recent New York Times magazine is ill-timed.

Are you looking for irresistible values? Check out Philip Durell's latest value picks by taking a 30-day free trial to Motley Fool Inside Value .

Alyce Lomax does not own shares of any of the companies mentioned.