Dow Jones, publisher of the Wall Street Journal, on Wednesday became the latest publisher to warn that it would miss earnings estimates for the first quarter. The company also said in an internal memo that it will lay off some employees because of a sharp dropoff in ads at its flagship paper.
In the next few weeks the company will make "limited reductions in our workforce" of 8,850, including cutting some jobs through attrition, Dow Jones Chairman Peter Kann wrote to employees in a company-wide e-mail Wednesday. Advertising at the Journal declined 32.1 percent in February, compared with a 42.1 percent increase in the same period last year.
Dow Jones now says it expects first-quarter ad volume at the Journal, when compared with the same period a year earlier, to decline 25 to 30 percent, rather than the 15 to 20 percent it warned of in January. The company also revised its earning estimates, saying that in the first quarter it would take in 16 to 20 cents a share, rather than the 55 to 61 cents it forecast in January.
"It should come as no surprise to any of us in a company covering business and financial news that we some months ago entered a more challenging business environment," Kann wrote in his message. "I'd ask you not to heed rumors, to understand that many of the staff reductions we envision can be achieved through attrition, and to remember that the remainder will constitute a very small fraction of a company of 8,850 employees."
At 3:38 p.m. EST Wednesday, shares of Dow Jones were down 7.24 percent, or $4.44, to $56.91.
Also Wednesday, Dow Jones said it would take a charge of $255 million for the fourth quarter of 2000 related to payments that its former subsidiary Telerate owes to data providers. Telerate went bankrupt after Dow Jones sold it to Bridge Information Systems (dossier).
The warning from Dow Jones follows similar news from newspaper giants Knight-Ridder and the New York Times (NYT). On Tuesday, Knight-Ridder officials confirmed that the company had warned employees of impending layoffs as a result of the poor ad market. Knight-Ridder owns the San Jose Mercury News and the Philadelphia Inquirer, among other properties.
At 3:37 p.m., Knight-Ridder was down 2.81 percent, or $1.70, to $58.70.
On Monday, the New York Times said it would earn 35 to 38 cents a share in the first quarter, rather than the 45 cents analysts had expected. The company also said it still expects to meet its 2001 estimate of 10 to 15 percent growth in earnings per share.
The company also revised its forecasts for 2001, saying that its newspapers' ad revenue would grow by 1 to 3 percent, rather than the 5 to 7 percent previously estimated. In addition to its namesake paper, the company publishes the Boston Globe.
At 3:45 p.m., the New York Times Company was down 2.64 percent, or $1.13, to $41.75.
