Cost Cuts Coming Fast and Furious at the Grey Lady

The market is snapping back fast and furious in some of the most crazed action we have seen over the past week. The activist investors rattling cages at the the New York Times (NYT-NYSE) are not participating today however, as the stock continues to mark time as Pinch works his magic, which consists mostly of wielding a guillotine:

From an investor's point of view, the New York Times might consider changing its slogan to All the Bad News That's Fit to Print. The Times Company posted a decline in quarterly profit -- dragged down by a year-ago gain -- which missed Wall Street's expectations.

"During the quarter, we saw the continued effect on our businesses of the U.S. economic slowdown and secular forces playing out across the media industry," said Janet Robinson, president and chief executive in a press release. "Print advertising continued to soften during the quarter, particularly in the classified areas."

The Times, like all of the companies in its sphere, continue to grapple with the major challenge of making big money online. MarketWatch

The activists cannot be cheered by the recent 52-week low in the stock or the tepid reaction to the earnings release. I have seen family controlled publicly-traded corporations run into the ground, purposely, by management who then stepped in to LBO the company when it was left for dead. Will that happen here?

I would not put anything past Pinch Sulzberger. A single digit quote might agree with the notoriously cheap bastard, who rivals Jerry Yang when it comes to contempt for public shareholders.

Is it too late to vote with your feet? Maybe, and I would have to agree with MarketWatch that the Times is making steady progress online:

For the Times executives, the current economic climate must be particularly frustrating. They believe that their company has moved smartly and aggressively in its Internet businesses and yet the media company is stuck in the same quicksand as everyone else.
Wall Street, however, is famously unforgiving. Investors aren’t likely to give brownie points to the management for effort, or even for vision. The Street demands results. In what has spilled over to a bitter public dispute, the Times Co. has been pushed by investors to maximize profits, and the drumbeat will continue as long as shareholders feel disappointed.

The pressure is mounting. If the Times’ top executives can’t come up with a convincing strategy, you can bet that these disgusted investors will move to find people who can.

And I continue to consider the possibility that Pinch’s drinking buddy Steven Rattner of Quadrangle Group will be involved in the end game, somehow.

For now, cost cutting rules the day. And with 2008 shaping up as the worst year for the newspaper industry since the Great Depression taking a flyer in the stock is probably ill-advised.

Take a peek at the Times coverage of the Times, which tries to make the best of a bad situation. Internet advertising is ramping:

Internet revenue at the company rose 12.8 percent in the quarter, to $91.3 million, and online advertising rose 18.3 percent, to $80.8 million. That represented about 12.3 percent of the company’s total revenue in the quarter, compared with 10.3 percent in the period a year ago.

Revenue rose 15.8 percent, to $28.6 million, at the About Group, which includes About.com, and operating profit climbed 7.1 percent, to $9.1 million.

Circulation revenue, which is falling at most newspaper companies, rose 2.5 percent or $224.2 million as it did in the first quarter, based primarily on a price increase at The Times. NYT

The upcoming election might buy Pinch some time, but despite outperforming his media peers, it is tough to make a strong case for the stock. There are thousands of dirt cheap stocks at the moment; who need this one on their sheets?
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Not all beaten down stocks are bouncing

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