The analysis of display advertising market share rarely mentions the tier of sites below the largest ones by audience. Those most likely to be hurt badly, if they have not already been, are the online sites of old-line media companies. The New York Times (NYSE: NYT) has had trouble with its very modest online ad growth. Among sites measure by Comscore, it had 76.4 million unique visitors in December to Facebook’s 152.5 million. And Facebook’s audience continues to grow quickly. The New York Times’ does not. Gannett (NYSE: GCI), which announced earnings yesterday, has confronted the same challenge. Its increase in internet ad revenue last quarter was depressing and hardly enough to offset drops in traditional print advertising. It had 44.1 million unique visitors in December, despite the fact that it owns the giant national newspaper USA Today. Scripps Networks (NYSE: SNI) and the Washington Post (NYSE: WPO) are in a position that is just as difficult.

Facebook has not only started to squeeze out the major portals. It takes an ongoing piece of a market that has thousands of websites in it. This display advertising market, which appeared so promising just a few years ago, is hardly promising at all.

Douglas A. McIntyre

The unofficial closing bells put the DJIA down nearly 7 points to 12,653.5 (-0.05%), the NASDAQ fell more than 4 points (-0.16%) to 2,811.94, and the S&P 500 fell -0.25% or more than 3 points to 1,313.02.

There were several analyst upgrades and downgrades today, including Kellogg Co. (NYSE: K) cut to ‘neutral’ at JP Morgan; Staples Inc. (NASDAQ: SPLS) cut to ‘sell’ at Goldman Sachs; Time Warner Inc. (NYSE: TWX) cut to ‘equal-weight’ at Barclays; Advance Auto Parts Inc. (NYSE: AAP) and Autozone Inc. (NYSE: AZO) both raised to ‘buy’ at Goldman Sachs; and JPMorgan Chase & Co. (NYSE: JPM) maintained as ‘buy’ but removed from Conviction Buy List at Goldman Sachs.

Earnings reports since markets closed last Friday have led to some price changes as of the last half hour of trading today: Gannett Co. Inc. (NYSE: GCI) is down -6.77% at $14.19; Sify Technologies Ltd. (NASDAQ: SIFY) is down -5.4% at $4.74; The Wendy’s Co. (NYSE: WEN) is down -3.03% at $5.05; and Old National Bancorp. (NYSE: ONB) is down -1.90% at $11.86.

Other standouts from today include the following stocks:

GTX Inc. (NASDAQ: GTXI) is up nearly 49% at $5.86. The drug maker’s shares have been given a new price target of $19/share from Citigroup. We have more coverage here.

Pep Boys – Manny, Joe and Jack (NYSE: PBY) is up more than 23.5% at $14.92 after posting a new 52-week high of $15 earlier in the day. The auto parts retailer has agreed to an acquisition at $15/share. See more of our coverage here.

Thomas & Betts Corp. (NYSE: TNB) is up 13.33% at $71.28 after posting a new 52-week high of $71.80 earlier today. The electrical components maker has agreed to an acquisition by ABB Ltd. for $3.9 billion.

Cell Therapeutics Inc. (NASDAQ: CTIC) is down nearly -18% at $1.10. The drug maker has withdrawn its application with FDA for approval of its non-Hodgkin’s lymphoma treatment.

Pharmerica Corp. (NYSE: PMC) is down nearly -12% at $12.64. The pharmacy services provider has expressed its wish that a hostile takeover bid from Omnicare Inc. (NYSE: OCR) will be withdrawn, following a Federal Trade Commission suit to block the deal. More coverage here.

Stay tuned for Tuesday. We have noted the following events on the schedule (all times Eastern):

• 8:30 a.m. – Employment cost index
• 9:00 a.m. – Case-Shiller housing price index
• 9:45 a.m. – Chicago purchasing managers index (PMI)
• 10:00 a.m. – Consumer confidence index
• 3:00 p.m. – Farm prices report

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Paul Ausick

What is interesting is that the results were actually better than expected.  Gannett managed to beat expectations by $0.03 at $0.72 in earnings per share.  Total company revenues fell by about 5% from a year earlier $1.39 billion, mostly in-line with expectations.

Gannett shares are down 7.1% at $14.15 after this morning’s report on earnings and the 52-week range is $8.28 to $18.93. The fear is that the newspaper business is going to be the cigarette business, except even worse, with secular decline on the horizon regardless of the economy.

Shares of Thomas & Betts are up nearly 23% in early trading this morning on a $3.9 billion buyout offer from ABB Ltd. (NYSE: ABB). Nearly 12 million shares have been traded so far today, compared with a 3-month daily average of about 330,000.

Another big winner this morning has been Pep Boys, also up about 23% following a $1 billion buyout from private equity firm Gores Group. More than 11 million shares have traded this morning, compared with a 3-month daily average of around 500,000. More coverage here.

Amylin up about 19% on news that its new diabetes drug has gained regulatory approval. Nearly 12 million shares have traded this morning, compared with a 3-month daily average of about 2.3 million.

GTX is up about 38% at $5.15 on nearly 2.5 million shares traded compared with a daily average of about 188,000. The drug maker’s shares have been given a new price target of $19/share from Citigroup. We have more coverage here.

Gannett is down more than -7% at $14.14, with nearly 4.6 million shares traded this morning, compared with a 3-month daily average of about 4 million shares. The newspaper publisher reported a -33% drop in quarterly profit and newspaper ad revenue fell -7.1%.

Paul Ausick

Yahoo!’s revenue fell 13% to $1.324 billion in the fourth quarter. Net income dropped 5% to $296 million. Even with its new CEO, almost no one who watches the company thinks there is a solution to the ongoing shrinkage of sales.

Yahoo! will somehow add cash, perhaps over $10 billion, to its balance sheet through the sale or spinoff of Yahoo! Japan and its stake in Alibaba. The means by which it will handle those transactions are still an open question because of tax issues and the difficulties of negotiations with the two Asian companies. Neither of them has to make a transaction with Yahoo! now.

MSN and Aol already have huge online audiences. They have to find ways to increase sales from these visitors, but there is no proof that combining with Yahoo! will do that.

Companies that lack the scale that they need to augment their traditional media sales with larger online ones would find Yahoo! an important acquisition. It would allow them to marry their old world TV or print sales with a larger online audience. CBS had 79 million unique visitors in December, according to research firm Comscore. Viacom’s digital properties had about the same number. Comcast (NASDAQ: CMCSA) had 50 million and Gannett (NYSE: GCI) had 44 million. None of these figures comes close to Yahoo!’s 176 million.

The troubles of traditional media are well understood. Public firms like CBS and Gannett face the erosion of television and print ad sales. Right now, their digital sales are insufficient to make up for that attrition. The chance to go to advertisers with packages that combine old media marketing with new may be their only chance to keep revenue advances — and happy shareholders.

Yahoo! has a market cap of $19 billion. Much of that is based on the value of Alibaba and Yahoo! Japan. Yahoo!’s core business may be worth less than $10 billion. That makes it an affordable purchase or merger candidate for most large traditional media companies, which have larger market values than Yahoo!.

The argument against a the ownership of Yahoo! by a traditional media company is that the older company would have no better chance to increase the portal’s revenue than MSN would. That is not true. Large advertisers continue to look for ways to reach huge audiences, some of which consume most media through traditional channels and some of which spend much of their time online. Yahoo!, in combination with a traditional media company, would offer the world’s largest marketers a chance to gain both through one firm.

Douglas A. McIntyre

Japan has its first trade deficit since 1980. (Reuters)

Yahoo! (NASDAQ: YHOO) posts weak earnings on a revenue drop. (Reuters)

International Monetary Fund’s Lagarde says that if Europe combined the ESFS and ESM rescue funds, it would raise confidence in the chance that a bailout of weak economies would work. (Reuters)

A PricewaterhouseCoopers study shows CEOs are concerned about a negative reaction to the  situation in Europe. (Reuters)

More cracks are found in the wings of Airbus A380 super jumbos. (Reuters)

Roche offers $5.7 billion to buy gene map firm Illumina (NASDAQ: ILMN). (Reuters)

The Baltic Exchange’s measure of the cost of shipping commodities plunges, an indication of a slow economy. (Reuters)

Ericsson’s (NASDAQ: ERIC) shares plunge after it said profit for Q4 dropped sharply. (Reuters)

Facebook will suspend trading in its shares for three days, but does not explain why. (Reuters)

EU executives will block an NYSE Euronext (NYSE: NYX) merger with Deutsche Borse. (Reuters)

Google (NASDAQ: GOOG) to combine information on users, which will make it harder for them to keep private. (WSJ)

Morgan Stanley (NYSE: MS) presses to lead the Facebook IPO. (WSJ)

The parent company of British Air may be part of an AMR buyout. (WSJ)

The IMF cuts its forecasts for most nations around the world. (WSJ)

AMD (NYSE: AMD) shows a loss on large write-downs. (WSJ)

The Defense Department to reveal its plans for budget cuts. (WSJ)

The PMI of many parts of Europe rises. (WSJ)

EU finance ministers press Greece and its private creditors to settle differences on refinancing. (WSJ)

General Motors (NYSE: GM) is accused of using the government bailout as the means to make the Chevy Volt. (WSJ)

McDonald’s (NYSE: MCD) quarter is driven in part by late-night food sales. (WSJ)

Del Frisco’s Restaurant Group plans to go public to raise $100 million. (WSJ)

Olympus is in talks with Sony (NYSE: SNE) to raise $1.3 billion. (WSJ)

The Avenue Capital Group will take over Quiznos as part of a debt restructure. (WSJ)

Gannett (NYSE: GCI) buys Fantasy Sports Ventures so that it can focus more on sports news. (WSJ)

Daniel Mudd, CEO of Fortress (NYSE: FIG), leaves after charges of securities fraud. (WSJ)

Morgan Stanley makes only a small number of its executives new managing directors. (WSJ)

European banks restructure to improve balance sheets, but some moves may be blocked by regulators worried the changes could hurt the financial system. (NYT)

The European Central Bank faces losses on Greek bonds that could reach 55 billion euro. (NYT)

Oil imports helped drive Japan’s rare trade deficit. (NYT)

The IMF presses the ECB to take larger losses on Greek bonds. (FT)

Citigroup (NYSE: C) may make more spending cuts in its securities group. (Bloomberg)

Douglas A. McIntyre

Shares in companies such as the New York Times (NYSE: NYT), Gannett (NYSE: GCI) and McClatchy (NYSE: MNI) moved up sharply early on. But those stocks are down between 10% and 50% for 2011. The balloon of hope that digital revenue and lower costs would rescue the industry has popped. Digital sales have not nearly matched the attrition in print revenue. Some newspaper companies have had difficulties driving digital revenue up compared to numbers from 2010.

The theory behind the aggressive purchase of newspaper stocks actually fails into three areas. The first is that large companies like the New York Times would make share market gains in the revenue from online ads and digital subscriptions — the so-called pay wall. The next is that newspapers could shrink their print subscription bases and retreat to geographic areas in which only subscribers who would pay premiums reside. The third, and most radical, is that some papers could discontinue seven-day-a-week delivery schedules. These papers could keep print subscribers if they only printed and delivered papers three or four days a week. Readers would go online to get news on the other days.

The weakness behind these notions has to do with the way people get news now. There are enough news sites, many of them local, that readers have a number of options when they look for news and entertainment content. The other expectation of publishers is that they could shrink their way to profits. However, print revenue continued to fall more rapidly than costs. Papers have to keep some level of newsroom staff in order to remain viable sources of local news. Presses still have to run. Trucks still have to deliver.

The hope that digital media would save newspapers turned out to be false. If anything, the availability of large amounts of information online undermined the industry as much as anything else.

Douglas A. McIntyre

American Express Co. (NYSE: AXP) was over 151.6 million shares, SAME AS last quarter.
Bank of New York Mellon Corp. (NYSE: BK) was 1,793,915 shares, SAME AS last quarter.
CVS Caremark Corporation (NYSE: CVS) is a NEW POSITION of 5,661,000 shares worth $190.1 million.
Comdisco Holdings (NASDAQ: CDCO) was roughly 1.5 million shares, SAME AS BEFORE.
Coca Cola Co. (NYSE: KO) was right at 200 million shares, SAME AS BEFORE.
ConocoPhillips (NYSE: COP) is roughly 29.1 million shares, roughly the SAME AS BEFORE but it is still lower than previous quarters.
Costco Wholesale (NASDAQ: COST) 4,333,363 Shares, SAME AS last quarter after having lowered it before.
DirecTV (NASDAQ: DTV) is a NEW POSITION listed as 4,249,400 shares worth $ 179.6 million.
Dollar General Corporation (NYSE: DG) is a LARGER POSITION at 4.497 million shares worth some $169.8 million versus last quarter’s new position of 1,497,800 shares.  This one of our Top Stocks for the Next Decade.
Exxon Mobil Corp. (NYSE: XOM) was 421,800 shares; SAME AS before but lower than the 1.276 million shares originally.
Gannett Co. (NYSE: GCI) was 1.74 million, SAME AS BEFORE but decreased in prior quarters.
General Dynamics Corporation (NYSE: GD) is a NEW POSITION of 3.064 million shares worth $174.3 million.
General Electric Corp. (NYSE: GE) is 7.777 million shares; SAME AS before.  Please note that this does not include the huge preferred shares from late in 2008 that are likely to be called from Buffett later this year.
GlaxoSmithKline (NYSE: GSK) 1.51 million shares, SAME AS last quarter.
Ingersoll-Rand (NYSE: IR) was 636,600; SAME AS last quarter but still way down from prior reports.
Intel Corporation (NASDAQ: INTC) is a NEW POSITION of 9.333 million shares worth $199.6 million. 
International Business Machines Corporation (NYSE: IBM)  is a NEW POSITION and we found out this morning that Buffett’s stake is nearly 64 million shares worth well over $10 billion with an average cost of about $170 per share.
Johnson & Johnson (NYSE: JNJ) was just over 37.4 million, a LOWER POSITION versus the 42.6 million shares the June quarter and way under the peak of 62 million shares at one point in prior quarters.
Kraft Foods (NYSE: KFT) was a LOWER POSITION at 89.7+ million versus 99,467,624 shares at the June quarter and way down from before selling during the Cadbury purchase.

Despite the revelation made this morning and despite the new positions in IBM and Intel, there is still data not represented in Berkshire Hathaway’s full holdings: Confidential information has been omitted from the Form 13F and filed separately with the Commission.  It looks as though Warren Buffett was again given permission to delay or omit some of the new holdings.

PAGE TWO…BUFFETT HOLDINGS ‘L to Z’

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JON C. OGG

Publishers claimed that as the last recession deepened, their industry was in a cyclical decline. The industry would right itself financially when the economic trouble had passed. Most industry analysts disagreed. The problem was secular, they said. Online news outlets had taken away too many readers and too much advertising. Major newspapers had only a decade of life, if that.

The success of online subscription sales for some newspapers is the most positive change that has occurred. This is particularly true of the New York Times and the Wall Street Journal. They invest in news coverage that is broad and deep enough to make their content extremely valuable to large numbers of readers. Many subscribers recognize this value for these newspapers and are willing to pay to have access to articles online. This is an important point to consider since most online news is free.

24/7 Wall St. examined the fortunes of the ten largest newspapers in the United States by daily circulation. We have also looked at online visitors based on data from research firm Compete. What we found was that a small number of these properties have good financial prospects. The others are not much better off than they were at the depth of the recession, despite of the significant costs that they have cut from the business.

The FBI may investigate the fall of MF Global (NYSE: MF). (Reuters)

Sony (NYSE: SNE) cuts its annual profit forecast by 90%. (Reuters)

PIMCO’s Bill Gross says U.S. banks must raise more capital. (Reuters)

Bank of America (NYSE: BAC) drops a plan for $5 a month debit card charges. (Reuters)

Facebook continues to struggle to attract large branded advertisers, which use member pages to generate interest. (WSJ)

Banks across the world begin sharp cost cuts. (WSJ)

Yahoo! (NASDAQ: YHOO) discusses a plan with PE firms that would allow them to take a modest interest but not gain control of the company. (WSJ)

Electronic Arts (NASDAQ: ERTS) begins to compete with Zynga. (WSJ)

Pfizer (NYSE: PFE) will market branded Lipitor after the drug goes off patent. (WSJ)

U.S. auto sales rise 7.5% in October, which is below expectations. (WSJ)

Many wealthy Chinese want to leave the country. (WSJ)

Transocean (NYSE: RIG) increases legal action against BP (NYSE: BP) from events arising from Deepwater Horizon. (WSJ)

New data show that the News Corp.’s (NYSE: NWS) Wall Street Journal had the largest circulation in the U.S. in the most recent half year measured, followed by Gannett’s (NYSE: GCI) USA Today and New York Times Company’s (NYSE: NYT) flagship paper. (WSJ)

Many S&P 500 companies issue weak Q4 guidance. (WSJ)

The most distressed commercial real estate begins to draw investors. (WSJ)

A vocal minority in Greece want the nation to return to its own currency. (WSJ)

Douglas A. McIntyre