Tuesday, August 12, 2008

Don't believe the (negative) hype about media companies

Here’s a good example of why newspaper and media companies are getting a bad rap and are suffering under the unrealistic expectations of Wall Street.
I’ve written before about the shortsightedness of newspaper executives who fail to play to their strengths and listen unreasonably to the unfounded fears of Wall Street.
Today, the Associated Press reported a story on the second quarter results of Thomson Reuters, a financial information services company similar to Bloomberg and News Corp.
Here’s the headline: Thomson Reuters 2Q Profit Slides 54 percent.
Oh boy, here we go again, right? Another media company going down the tubes, right?
Here’s a closer look at the numbers: Net income (profit) fell from $377 million down to $173 million. Let me point out that it’s still a highly profitable company at $173 million. And that’s just one quarter!
Revenue rose 73 percent to $3.13 billion. What?!?! Revenue rose 73 percent? Why isn’t that the headline? $3.13 billion?!?! That’s a lot of money. A whole lot of money.
But what did Thomson Reuters’ shares do on Wall Street? They fell, of course.
Boy, with revenues at $3.13 billion and profits of $173 million, it sounds like it’s time for some layoffs and cost cutting.

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