Promising signs for McClatchy
Don Day | October 15, 2009
McClatchy – owner of Boise’s Idaho Statesman had a good quarter, and was able to turn a profit, despite shrinking revenue. This from the AP:
Newspaper publisher McClatchy Co. rode a wave of traumatic cost cutting and a one-time tax adjustment to a higher third-quarter profit, overcoming yet another jarring decline in revenue.
McClatchy earned $23.6 million in the quarter. The company was able to turn a profit despite the decrease in revenue by aggressively cutting costs (and, unfortunately – jobs).
There’s one very sober line in the AP piece:
McClatchy probably wouldn’t be making money if it hadn’t been dumping payroll and other costs more quickly than its revenue eroded.
But, the company’s online revenue grew by about 3% in the quarter.
Not surprising. Most of the “profits” that are being touted by Wall Street are the result of cost cutting measures exactly as described in the case of our “favorite local publisher”. In some cases these cuts for some listed firms include cuts in research and development in an attempt to pad their earnings statements. This is great short term but when you cut into the muscle of a corporate body eventually the body will lose its support system and lose its ability to function. Fat is where its at but ugly goes to the bone.