New York Times shares slammed on grim forecast

Things are about to get worse at the New York Times.

The company told investors Thursday to get ready for a drop in ad spending in the fourth quarter - news that crushed the stock, sending it down 6%.

The Times has been trying to maintain a tough balance: Show enough growth in digital to offset the drop in the traditional print business, which is much larger.

And it has to do that while cutting costs. The most recent downsizing will affect 100 employees. But severance costs from those cuts hit $21 million in the third quarter. The company posted a $12 million loss as a result.

nyt earnings one

The company has been posting gains in online ads, and in the third quarter, those digital ads (up 16.5%) were nearly enough to almost balance out the loss in print ads (down 5.3%). But the Times doesn't expect that to continue in the fourth quarter, and expects an overall drop.

Advertising is now responsible for about 40% of the company's total revenue.

nyt earnings two

The company has had some success with people paying to read the TImes online, as well as with higher prices for home delivery of the paper. Still, the result is growth of just 1.3%.

And growth in digital revenue has been slowing and there are limits to how much the paper can charge even its affluent readers for the print edition.

nyt earnings three

New York Times (NYT) shares dropped 6% on Thursday and are now down more than 20% for the year. The stock tumbled after the Times released second-quarter results as well. The issue then: The concern that digital subscriptions had peaked.

Investors are clearly concerned about the long-term challenges print media and the Times ability to buck those industry trends.

The Times is trailing even other print media stock such as News Corp (NWS) and Time Inc. (TIME)

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