New York Times Outlines Cost Structures & Cuts (NYT)

The New York Times Company (NYSE: NYT) has provided some updated guidance for the fourth quarter of 2007 and is providing its initial outlook for 2008.

Janet L. Robinson, president and CEO: “We expect November revenues will be up 1 to 2 percent.  Digital and circulation revenues showed good growth, offsetting lower print revenues. Classified advertising continued to be weak, particularly the real estate category.”

Fourth-Quarter 2007 Guidance:

• Staff reduction costs approximately $14 to $16 million;
• Depreciation and amortization of $47 to $49 million (previous range $48 to $50 million);
• Income from joint ventures: Loss of $3 to $5 million.
• Interest expense of $11 to $13 million.
• Capital expenditures of $70 to $90 million (previous range $50 to $80 million).
• Income tax rate approximately 41%.

Initial 2008 Expectations:

• Cost savings and productivity gains target a cost reduction from a 2007 cost base of a total of approximately $230 million in 2008 and 2009, excluding the effects of inflation and certain one-time costs. About $130 million of these savings are expected in 2008.
• Depreciation and amortization – $160 to $170 million, which includes approximately $5 million of accelerated depreciation expense in the first quarter of 2008 associated with the New York area plant consolidation project. Depreciation for the new headquarters building is expected to be $8 million per quarter.
• Income from joint ventures about $12 to $16 million.
• Interest expense: $50 to $60 million.
• Capital expenditures: $150 to $175 million.
• Income tax rate approximately 41%.

Unfortunately the company is not issuing its November numbers until mid-month.  We are also not seeing any key projections on earnings or what the subscriber drop-offs are expected to be.  Without that data, we are just considering this a cost basis projection out of the company.

New York Times shares are not making any key indications off this.  At a $16.95 close yesterday this is only about 6% off its year lows and it has traded in a $16.02 to $26.90 range of the last 52-weeks.

Jon C. Ogg
December 5, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.