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As Predicted, a Not-Terrible Quarter for the New York Times: Print Ads Shrink Less, and the Web Actually Grows

Peter Kafka — Wed, 10 Feb 2010 13:55:07 +0000

As predicted, a nice Q4 for the New York Times, at least by newspaper standards: Revenue shrank, but not as badly as in the past, and operating costs continued to come down.

The paper reported earnings of 44 cents per share (after factoring out one-time items) on revenue of $681 million; Wall Street was expecting earnings of 38 cents on revenue of $653.7 million.

Both official and unofficial word from inside the Times indicated that the paper had a not-terrible Q4. In December, the company had already told Wall Street that it expected to see print ads decline about 25 percent and Web advertising bounce back by 10 percent.

Today’s numbers were a little better than that: Print ads were down 20 percent, and digital ads were up 11 percent. Overall ad revenue was down 15 percent, while Internet revenue was up 10.3 percent.

In Q3, the paper saw ad revenue drop 26.9 percent, while Internet revenue dropped by 7.2 percent. Bear in mind that year-ago numbers were miserable, so improving on them is a tempered success.

Expect more of the same going forward, the paper said: “Looking ahead, visibility remains limited for advertising. In the first quarter of 2010, we expect the rate of decline for print advertising to continue to improve modestly from the fourth quarter of 2009, while digital advertising is expected to perform in line with the fourth-quarter level.”

Given that the New York Times (NYT) was already relatively optimistic about the quarter before it announced plans to erect a pay wall, it’s safe to assume that today’s results will have zero impact on that schedule.

But given that the paper hasn’t said a lot about those plans publicly, it will be worth listening to today’s earnings call to see if it offers more clarity. Plus, of course, the obligatory discussion about the Times’s plans for Apple’s (AAPL) iPad. I’ll be covering the call live at 11 am Eastern.

New Way to Flit from Store to Store

Katherine Boehret — Wed, 03 Feb 2010 02:16:00 +0000

Imagine going to the mall in search of a new pair of black leather gloves. But this time, rather than starting the search by going straight to your favorite stores, which look familiar and carry recognizable merchandise at expected prices, you must walk to the center of the mall and sort through a giant bucket of gloves with few identifying marks other than price.

Wacky as this scenario sounds, it’s the way many people shop online every day. They look for specific items by searching Web sites like Amazon.com (AMZN) and eBay.com (EBAY), where results are displayed in big lists without much association to stores. That means all the details a customer knows about a store—its ambiance, prices, style, quality and variety—aren’t put to use.

[ See post to watch video ]

This week, I shopped online with Flit.com, a free Web site owned by San Francisco-area company enterONCE LLC that encourages people to shop using the same method they use at the mall: Start inside familiar stores, not in a giant bucket of products. It’s designed so people will enter a search item once and receive multiple suggestions of places where the item might be sold. As shoppers “flit” off to those stores, Flit.com serves as a home base, remembering the original search so shoppers can flit back, choose different stores and shop from there again and again.

I used Flit.com to shop online for black high heels, a digital camera, the iPad (not yet available), a robe, running sneakers and black leather gloves. I found that using it saved me from having to manually enter multiple URLs, and I liked how it helped me shop from store to store, since I already associate certain styles with each.

Select from the list of stores carrying black dresses. The store’s Web site opens to reveal all the black dresses carried there.

A male colleague of mine explained that he doesn’t naturally shop according to stores, so it’s worth noting that Flit.com may appeal to women more than men. I wish Flit.com had a way of combining its store shopping with side-by-side comparisons of the same product; the company plans to add this in March.

The Flit.com shopping process works as follows: Type in a search item, such as “red dress,” then choose to search in Value or Premium stores and press the Enter key. This returns a list of stores from a pool of more than 300 that carry red dresses; store categories can be selected to return more accurate results. Select one store, and its Web site opens to reveal all the red dresses carried there. Search results include stores like Target, Best Buy (BBY), Bloomingdales, Sam’s Club and J. Crew, as well as popular shopping sites like Amazon, NexTag, Buy.com and eBay.

The value behind Flit.com’s method of flitting you out to individual store sites is twofold. First, you still get to shop on a store’s own Web page, many of which were designed to uniquely reflect the store’s spirit and style. Lots of shoppers have saved shipping and credit card information with a store Web site, or they have coupon codes or gift certificates to use there. Shopping on each store’s page rather than on a general shopping site lets them tap into that data.

Type in an item such as ‘black dress’ (above), choosing to search in Value or Premium stores.

Second, after you flit off to a store Web site, an orange button remains in a Flit.com toolbar at the top of the page; click there to return back to home base before flitting off to yet another shopping site. Flit.com will keep a breadcrumb trail of where you have gone in your shopping session, using store icons to represent each site that was visited. You can place a check mark beside sites to remember them.

Flit.com’s search results are only as good as each individual store’s search engine, so if a store doesn’t do a good job of querying its own inventory, you’re out of luck.

The Flit.com home page would benefit from offering more ways to sort stores, such as by price range rather than just by using Value, Premium or alphabetical order—especially because “value” and “premium” mean different things to different people. The company’s CEO says Flit.com will likely add sorting by price and other categories by this spring.

In a hunt for a robe using Flit.com, I was surprised to see that of the 12 top stores that appeared at the top of the list, seven of them didn’t carry robes, according to what the store sites told me when I linked out to them. I asked Flit.com’s CEO about this and he said that search returns don’t filter out some stores that may have limited or no selections, and that this is valuable because it shows shoppers that a certain store doesn’t carry an item—just like physical shopping. I had hoped that one advantage to Flit.com would be less virtual wandering in stores that don’t carry what I am looking for.

Banana Republic, Gap and Old Navy Web sites, all owned by the same company, didn’t display the orange toolbar button that returns shoppers to Flit.com because they use their own toolbar at the top of their pages.

It’s too bad that Flit.com’s breadcrumb trail, which tracks where a user has shopped, doesn’t hold specific items. For example, I found the same pair of running sneakers in my size after digging into Web sites for Road Runner Sports and Zappos, but I couldn’t save the shoes anywhere. Flit.com’s CEO says capturing individual products and merging them into the search trail will be offered in March.

Snipi.com, a free shopping site I reviewed last spring, uses a toolbar for holding items that are dragged and dropped into it so they can be remembered and revisited for buying at a later time. Flit searches can be saved or shared with others with the “save your shopping session” button. It prompts the user to enter an email address for sending a Web link of the saved session.

Flit.com is currently funding its operating costs from an original private investment and doesn’t have any formal relationships with the stores where it sends users. The site’s CEO says the company hopes to negotiate a system where it gets paid by the stores, or by third parties, for any business it generates.

After doing a lot of flitting, I noticed a screen between the Flit.com search results page and the store page that asked if I wanted to share Flit with friends, and offered to let me do so through email or a social-networking site like Twitter or Facebook. This screen pops up roughly every 25 flits, according to the company, but it includes a step to skip this and continue to the store’s Web page.

The people working at Flit.com seem to know what the site needs to improve, thus preventing it from being just another fleeting online shopping site. Its shopping trail needs a little help, as do its result categorizations, but the way it lets users shop online starting with familiar stores makes Web shopping comfortable and easy, much like visiting physical stores.

Edited by Walter S. Mossberg.

Write to Katherine Boehret at mossbergsolution@wsj.com

Dell Polishes Off Polish Ops

John Paczkowski — Thu, 03 Dec 2009 15:07:34 +0000

Dell is unloading another PC factory. The company is selling off its two-year-old computer manufacturing plant in Lodz, Poland, to Foxconn, the world’s largest contract electronics manufacturer, for an undisclosed sum. The facility’s 1,600 employees will keep their jobs and continue to crank out Dell boxes under an outsourcing agreement written into the deal.

For Dell (DELL), which has closed its factories in Ireland and North Carolina this year, this move is one more step toward its goal of slashing $4 billion from its annual operating costs by early 2011. Said company spokesman David Frink: “[This] is part of our ongoing effort to become more efficient. The intent is to leverage the capabilities of (third-party manufacturers) so we can direct our resources to other areas of our supply chain so we can innovate and add value.”

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AOL: We Need to Fire 2,500 "Volunteers"

Peter Kafka — Thu, 19 Nov 2009 13:08:15 +0000

AOL, which has already told investors it will spend up to $200 million firing a good chunk of its staff, has now told employees. The company is looking for “up to 2,500 volunteers,” CEO Tim Armstrong told his staff today. That’s a third of AOL’s payroll.

The voluntary layoff program begins Dec. 4, a few days before the company spins off from Time Warner (TWX). If AOL doesn’t get enough volunteers, it will ax people on its own.

This is lousy news for employees, who are faced with a “jump now or wait to be pushed” decision, but it is designed to cheer investors: AOL says the cuts will drop its annual operating expenses by $300 million. Through the first nine months of this year, AOL’s operating expenses ran around $1.8 billion.

Meanwhile, AOL is looking to shed some parts of its business altogether. It has hired bankers to sell off its ICQ messaging service and is considering dumping MapQuest, among other assets.

Armstrong’s (expensive) goodwill gesture: He is giving up his 2009 bonus, which was to be at least $1.5 million. His explanation to employees: “As a member of our team and the person who takes accountability for the results of the company, I am making the decision to forego my 2009 bonus. That decision is a personal one and is not a sign for the future payout of the overall bonus plan for employees.”

Here’s the text of the company’s filing with the Securities and Exchange Commission:

On November 19, 2009, AOL Inc. (the “Company”) informed its employees of proposed restructuring activities as part of its continuing cost reduction initiatives aimed at aligning the Company’s organizational structure and costs with its strategy (the “Restructuring”). The Restructuring is conditioned upon the successful completion of the Company’s previously announced spin-off from Time Warner Inc. (the “Spin-off”), as well as the approval of the Company’s new Board of Directors that will begin service in connection with the Spin-off. It is anticipated that, if approved, the Restructuring will include the reduction of approximately a third of the Company’s current employee base, which will be conducted on a voluntary and involuntary basis. The goal of the Restructuring is to reduce ongoing annual operating costs by approximately $300 million. If the Restructuring is approved, the Company expects to incur restructuring charges of up to $200 million, substantially all of which is expected to be incurred from the date of the Spin-off through the first half of 2010.

Sirius Breaks Even

John Paczkowski — Thu, 05 Nov 2009 13:12:37 +0000

Sirius XM Radio’s financial position is improving. Sadly, the same cannot be said for its subscribership. Reporting third-quarter earnings this morning, the company posted a loss of $149.1 million, or four cents a share on revenue that rose to $629.6 million from $612.8 million. Quite a bit better than its year-earlier loss of $4.88 billion, or $1.93 a share.

Absent one-time charges, the company broke even for the quarter. Analysts had been expecting a two-cent loss on revenue of $609 million.

Good news, but it was tempered with a bit of bad. Because Sirius’s (SIRI) subscriber growth is slowing. The company ended the quarter with 18.5 million total subscribers. That’s up 103,000 from the second quarter, but down 2.1 percent from a year earlier.

“We are very pleased with what we accomplished during the third quarter, especially when considering the macroeconomic issues affecting consumers and the auto industry,” Sirius CEO Mel Karmazin said in a statement.

“We managed to grow revenue, grow ARPU, reduce operating costs, increase adjusted income from operations significantly, and refinance higher cost debt,” Karmazin added. “We look forward to continuing this performance. We grew subscribers and improved churn in the quarter, and we are well positioned to take advantage of an economic rebound. We expect to grow subscribers, revenue, and cash flow next year regardless of the magnitude of any recovery.”

A Mixed Bag From the New York Times: Q2 Costs Got Better, Ads Got Worse, and Web Dollars Disappeared

Peter Kafka — Thu, 23 Jul 2009 13:00:07 +0000

We saw a mini-rally in newspaper shares yesterday, based on the hopeful notion that the worst may be over for the industry. Now investors are going nuts for the New York Times (NYT), at least in early trading, based on its Q2 results. But I think the results are a mixed bag.

The publisher was able to take a big chunk out of operating costs, knocking them down 20 percent. But revenue fell faster. The paper did say, though, that things got less bad as the quarter progressed, and that they’ll get slightly less bad next quarter, too.

The numbers: After factoring out one-time charges and benefits, the Times posted earnings of eight cents per share, well above the four-cent loss the Street was expecting. But revenue dropped 21 percent, to $585 million; the consensus was $603 million.

The Times posted an operating profit of $23.3 million; without one-time charges that number would have been $66.1 million. That’s worse than the $100 million the paper made a year ago, but much better than the $74.5 million it lost (net) in Q1.

But! Ad revenue declined 30.2 percent, an acceleration from last quarter’s 28 percent drop. In addition to the regular culprits, the Times noted a “lower volume of online advertising.” More details on that: Internet revenue dropped a shocking 14.3 percent, and Internet ad revenue was down 15.5 percent; last quarter they were down 5.6 percent and 6.1 percent.

The assessment from Times CEO Janet Robinson:

Based on what we have seen so far in July, we expect the advertising environment to continue to be challenging. We believe the rate of decline will moderate slightly in the third quarter from what we experienced in the second quarter.

As we look ahead, an enduring constant is the outstanding journalism of The New York Times Company and the esteem in which it is held by our readers. For the balance of the year, we are focused on developing innovative new products and platforms based on our high-quality journalism, particularly in the digital area, and continuing to aggressively lower our cost base to better align it with our revenues. When the economy and ad markets improve, we believe we will be very well positioned to benefit from the restructuring of our business.

CBS Interactive/CNET Re-Org: The Complete Memo

Peter Kafka — Fri, 12 Dec 2008 00:37:02 +0000

CBS paid $1.8 billion for CNET last summer, and today it is dealing with the consequences: A re-org and layoffs.

CBS execs won’t release specifics on the firings and won’t say how many people were let go altogether. So news will be coming out in piecemeal fashion for some time.

The best that I can tell, though, the cuts came throughout the company’s interactive group, from its London-based last.fm radio service through CBS (CBS) headquarters in New York to CNET’s homebase in San Francisco.

Based on the fact that CBS Interactive boss Quincy Smith flew to the west coast to quarterback the re-org this morning–and the fact that CNET was much, much bigger than the CBS Interactive group–I’m assuming that more CNET employees were let go than anyone else.

Quincy, if I’m wrong, please let me know. And CBS Interactive/CNET employees can reach me directly at peter@allthingsd.com.

In the meantime, here’s the new structure of Smith’s group, via an internal memo that comes from him and Neil Ashe, his CNET counterpart:

Team,

As we come to the end of 2008, we have a lot to be proud of. CBS Interactive is the best online content network for information and entertainment. Our properties are expanding, advertisers are capitalizing on our properties and their scale, and we are positioned well to continue to grow. As we prepare for 2009 and beyond, we’d like to update you on this progress, announce some organizational changes and comment on the broader market environment and how it impacts CBS Interactive.

Progress

CBS Interactive is the 8th largest Internet network in the world. Our combined traffic is up nearly 30% since we closed the merger this summer. CNET, CBSSports.com, BNET, GameSpot, TV.com, CBS.com, last.fm, and CHOW have each had record traffic within the past three months. Our commitment to our users is paying off.

Advertisers have noticed. We have recently signed and announced deals across several of our properties with Microsoft, AT&T, Intel, Bertolli, EA, and GM. In these challenging economic times, marketers are consolidating their efforts with their best partners. Our properties, our audiences, our ideas and our insights will continue to differentiate us in the marketplace.

Finally, we have contributed to and benefited from the TV and Radio divisions of CBS. We’ve done nearly 1,500 purpose-driven promotions to our properties on Broadcast TV, Radio and local TV Stations; CHOW and GameSpot content is running on the CBS Outernet; and CNET ran a major consumer campaign in markets like New York and San Francisco through CBS Outdoor. CBS Interactive is also a key partner to CBS Television Network for major broadcast events. In just the last week, we featured complementary content for events including The Victoria’s Secret Fashion Show, the Grammy Nominations and the SEC Championship.

Moving forward, we have a lot to look forward to. Events like CES, The Grammys, and March Madness on Demand are all just around the corner. Each represent huge cross-platform opportunities where CBS Interactive will again help complete the experience with coverage on air, online, and on mobile for our audiences.

Organizational Promotions and Changes

As we enter 2009, we are making some changes to our organizational structure to capitalize on audience and advertiser overlaps. We are also making some changes to key functions so that we can realize the benefits of our position in the marketplace. These changes mark another significant milestone in our integration, as we fine-tune our organization to best take advantage of the power of our entire network.

Sports, Games and Music

We are combining our Sports, Games and Music properties into a single group led by Steve Snyder. Steve has tremendous product and leadership experience and an enthusiasm for each of these categories. In addition, Tom Jones will be moving over from CNET to head-up the sales efforts for this group. Within the group, our talented senior leaders including Jason Kint, Rich Calacci, Jaci Hays, Kevin Menard, Felix Miller, Doug Schmidt and others will report to Steve and to Tom.

Entertainment & Lifestyle

We are also moving our Lifestyle properties, CHOW and UrbanBaby, to the Entertainment group (TV.com, CBS.com, The CBS Audience Network and TheInsider.com) to capitalize on the similarities in audience and advertisers. This group will continue to be led by Anthony Soohoo with sales led by Ken Lagana. We’re excited to see the innovation that will come from this group in 2009.

Technology & News

Under the continued leadership of Joe Gillespie, our Technology & News division will bring CBSNews.com and CNET News.com into a single CBS Interactive News Group. Each site will maintain its own brand identity, while benefiting from shared resources in design, product and engineering to deliver deeper and more comprehensive coverage of major stories and events. Led by Mark Larkin, with Dan Farber as Editor-in-Chief, CBS News.com and CNET News.com will also have the opportunity to share content and collaborate on stories for the benefit of their unique audiences.

CBS Interactive Marketing

We are bringing together our key marketing functions into a new group called CBS Interactive Marketing led by Mickey Wilson. The group brings together expertise from across the organization so that we can capitalize on our biggest opportunities, and elevate the company to be a strategic marketing partner whose products, consumer insights, and ad innovations are critical to our clients’ long-term success. They will establish the company as the standard for premium content online, and define and evolve brand strategies to capture the biggest opportunities for audience and revenue growth through market planning, insights and execution.

CBS Interactive Business Development

We are also bringing together all of our business development activities. This group will be led by Mike Marquez. Mike and his team will be responsible for the development of all new partnerships, investments, and acquisitions. They will be charged with taking advantage of knowledge sharing across the whole company to ensure that we are the strategic partner of choice for the industry.

Market Conditions

As you know the general economic environment continues to be a challenge. We have always been very aggressive about managing our costs, and that requirement is even more critical now than it has ever been. We believe this new, more efficient organizational structure will produce better results for CBS Interactive, and also result in lower operating costs. It is always very difficult to make these kinds of reductions, but they come after a thorough review of how we are organized and how we operate, and what best serves our many users, advertisers and employees.

CBS Interactive is a special place because of you, and we thank each of you for what you have done, are doing, and will do to exceed the expectations of the tens of millions of people who come to our properties every day.

Today, we sit in a great position. People seek out our brands because we provide them with the information and entertainment they want and need, and marketers seek us out because of the powerful audiences we attract. We are positioned to grow in 2009 and beyond.

Best,
-q, NA

Adobe Announces Crash® CS4 Professional

John Paczkowski — Wed, 03 Dec 2008 22:56:09 +0000

Well, no wonder Adobe won’t have an exhibition booth at Macworld Conference & Expo 2009–the company’s sacking employees who might have otherwise staffed it….

Citing the standard litany of economic tribulations, Adobe (ADBE) Wednesday reduced its fourth-quarter outlook and said it will cut 600 jobs around the world–about eight percent of its workforce. The company now expects revenue of $912 million to $915 million. In better times, that revenue target range had been $925 million to $955 million. “The global economic crisis significantly impacted our revenue during the fourth quarter,” said CEO Shantanu Narayen. “We have taken action to reduce our operating costs and fine-tune the focus of our resources on key strategic priorities.”

Adobe shares slipped nine percent to $20.50 in after-hours trading.