Despite so many recent signs that Dow Jones
Dow Jones said that third-quarter earnings will come in at $0.08 to $0.11 per share, as opposed to the $0.14 per share analysts had expected. Take a wild guess about the culprit -- September advertising revenues. Apparently they have been slower than expected at the company's flagship Wall Street Journal, lagging both analysts' expectations and last year's figures.
Personally, I'm not too surprised to hear news like this -- just yesterday, Yahoo!
I believe that with the economy a bit dicey lately, and growing concerns about the slowing housing market and consumer spending, companies may be more conservative about their advertising budgets. It should be interesting to see how other ad-dependent media companies fare in this environment, particularly rivals like The New York Times
On the other hand, Dow Jones said it expects ad revenue for WSJ to increase in the fourth quarter. That may prove to be a crucial period for many companies with a strong reliance on advertising of all types.
Of all the newspaper stocks, I've long considered Dow Jones one of the strongest, with its national presence, business and finance focus, strong online properties, and well-respected brands like WSJ, Barron's, and MarketWatch. However, it has also tended to be among the priciest as well. Its P/E ratio of 19, especially given the possibility of a slowing economy and decreased ad sales, makes me think that now's not the optimum time to consider purchasing shares of Dow Jones.
Want to read up on Dow Jones and some challenges to newspapers at the moment? Try out the following Foolish pieces:
- Dow Jones has recently mulled the idea of selling some community-based newspapers.
- It's also been examining its strategy.
- Newspapers have digital dreams.