I sold my shares of New York Times
That sounds better than it really is. "Better than expected" has taken on new meaning during the Great Recession – it's truly closer to "not nearly as abysmal as we thought it was going to be" than "better than the good results we were hoping for."
At New York Times, revenue declined by 17% to $570.6 million, while per-share net loss narrowed to $0.25 from $0.74 in last year's Q3. Non-GAAP income more than tripled to $0.16 per share. Total advertising revenue fell nearly 30%.
The Times' not-quite-awful results were aided by deep cost cuts, as operating expenses declined by 22%. Earlier reports from Gannett
|
Company |
CAPS Stars (out of 5) |
YTD Gain |
|---|---|---|
|
Gannett |
** |
53.4% |
|
McClatchy |
* |
305% |
|
New York Times |
* |
36.3% |
Source: Google Finance.
Data current as of Oct. 23.
So why sell New York Times now? Because my thesis for investing was predicated on success in the digital realm, an opportunity created not only by the Web, but also a flood of new e-readers from Amazon.com
New York Times has yet to see any digital windfall, yet my shares were up more than 50% in three months. The price got ahead of value, and I decided to sell.
In starker mathematical terms: At today's prices, New York Times trades for more than 30 times next year's earnings, far too expensive for a company operating in an industry that has yet to prove it can turn itself around.
But that's also just my take. What do you think? Are newspaper companies such as New York Times worth buying at today's prices? Will new digital technologies such as e-readers create enough growth to justify the heady valuations? Please take a moment to vote in the poll below, and then leave a comment explaining your rationale.
