Poor Playboy (NYSE:PLA). It found itself reporting very depressing results right before Valentine's Day, of all times.

Revenues for the fourth quarter declined 5% to $86.2 million, and operating income decreased nearly 58% to $3.1 million. Net income was $0.11 per diluted share, 21% worse than the comparable quarter.

For all of 2006, revenues and operating income dipped 2% and 71% (yikes!), respectively. Net income, however, really improved over the $0.02 loss booked for fiscal 2005, coming in at $0.07 per diluted share. You can thank the absence of any charges relating to debt extinguishment for the current GAAP turnaround, as well as the resultant decline in interest expense. Also, the company had a more favorable tax situation this year.

How are things at Playboy magazine? I wish I could say they were as hot as a centerfold, but they aren't. Reversing an overall net loss is an excellent step in the right direction, but the weak publishing entity that Playboy has become is intellectually glaring. Every single segment of the publishing division -- subscription sales, newsstand sales, etc. -- posted top-line declines for the year, as well as the quarter except for advertising, which increased 12% in Q4. International sales remained flat for the year and dipped a bit during the three-month period.

Now, to be fair, the fourth quarter saw a major reversal of losses in publishing -- the segment stemmed operating red ink to just $0.5 million, a huge improvement over the $3.1 million loss in the previous period. Also, Playboy expects a 22% gain in advertising sales for publishing in the first quarter. Here's a big area of concern -- those declining subscription numbers. Playboy must reverse that trend. Sure, the company will look to online subscriptions and e-commerce initiatives as a better area to focus on in comparison to the challenging print industry (a smart and necessary move, to be sure), but I will continue to argue that the flagship magazine is a strong brand ambassador to the public, and that it must be maintained. The company needs to synthesize an aggressive and comprehensive marketing campaign to support the magazine and staunch those subscription declines.

The takeaway from the recent struggles of Playboy is that shareholders would do well to remain patient. There's no question that the company is having a hard time; I believe, however, that the brand still has a lot of value and that it will reemerge as a triumphant icon in the future. Perhaps that's just wishful thinking, but if you look at Playboy's prospects with its licensing operations (this segment's income was up double digits in both the quarter and the full year), and you muse on the potential of its subscription video-on-demand model (available households have been rising like crazy), then you might come away with some optimism about the future. I don't blame anyone for being bearish on the company -- I've written several articles on Playboy, and I too am waiting for the clouds to lift. It's going to take time.

Sex certainly sells, and there are other publicly traded brands in this industry, such as New Frontier Media (NASDAQ:NOOF) and Rick's Cabaret (NASDAQ:RICK), which recently posted a sexy quarter. But there's only one Playboy. Don't buy it because you think it may be taken private -- that's just speculative talk right now. Look into it as a potential investment idea based on the notion that it will remain a strong player in adult entertainment years from now.

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Fool contributor Steven Mallas owns none of the companies mentioned. He is ready at any time to fly to the Playboy Mansion for a lengthy stay so that he can help the magazine iron out its problems, completely free of charge. As of this writing, he was ranked 13,084 out of 22,646 investors in the CAPS system. Don't know what CAPS is? Check it out. The Fool has a disclosure policy.