24/7 Wall St. » JRC

Gannett (GCI) Gives Up The Ghost

247wallst — Tue, 10 Jun 2008 05:13:38 +0000

Gannett (GCI) may take as much as $3 billion in non-cash write-downs for some of its assets. It is that bad in the newspaper industry. The charge would cover as much as 20% of the value of Gannett’s properties.

Gannett can survive the accounting action, at least for now. Its debt is a modest $4 billion when it is taken against revenue and operating income.

Some of GCI’s smaller peers are not so lucky. Journal Register was recently kicked off the NYSE for trading below $1 longer for longer than the exchange rules allow. Newspaper companies including McClatchy (MNI) and Gatehouse (GHS) have lost over 60% of their market value in just a year. The borrowing they took on to buy other papers is so great that their debt service may swamp operating income.

All of this is likely to cause a tremendous auction of newspapers as the public companies that own them can no longer afford to stay in business. That actually may be good news.

The Journal Register bought a large newspaper group in Michigan just a few years ago. It paid $425 million. Based on JRC SEC filings, those properties may be worth less than $100 million now. But, for a buyer, justifying $100 million is easier than swallowing four times that.

Newspapers, and their reporters, may be able to survive the industry downturn if the value of the properties falls far enough so that the leverage for owning them is modest.

The destruction of the value of the newspaper industry may be what saves it.

Douglas A. McIntyre

NYSE Delisting Candidates, Headed To The Pink Sheets?

247wallst — Thu, 17 Apr 2008 09:10:02 +0000

With the sudden delisting of the Journal Register, it is interesting to look at who else is on the NYSE list of companies who could get delisted. The NYSE is generally very good about this and lets the companies have time to get into compliance. Below are the lists. They are grouped based on why the NYSE has problems with them.

Issuers that are noncompliant with its quantitative and corporate governance listing standards:

Fremont General Corporation (FMT)

Fremont General Financing I (FMTPR)

Impac Mortgage Holdings, Inc. (IMH)

Impac Mortgage Holdings, Inc. (IMHPRB)

Impac Mortgage Holdings, Inc. (IMHPRC)

Journal Register Co. (JRC)

Luminent Mortgage Capital, Inc. (LUM)

Medifast, Inc. (MED)

Milacron Inc. (MZ)

NIS GROUP CO., LTD. (NIS)

Scottish Re Group Limited (SCT)

Scottish Re Group Limited (SCTPRB)

Sun-Times Media Group, Inc. (SVN)

Zarlink Semiconductor, Inc. (ZL)

Companies as delayed in filing both Annual and Interim Reports:

Beazer Homes USA, Inc. (BZH)
Diebold, Incorporated (DBD)
International Rectifier Corporation (IRF)
Penn Treat American Corporation. (PTA)

Sunrise Senior Living, Inc. (SRZ)
Symmetry Medical Inc. (SMA)
VeriFone Holdings, Inc. (PAY)
W Holding Company, Inc. (WHI)
WellCare Health Plans, Inc. (WCG)

Companies as delayed in filing an Annual Report:

China Yuchai International Limited (CYD)
Fremont General Corporation. (FMT)
Fremont General Financing I (FMTPR)
Impac Mortgage Holdings, Inc. (IMH)
Impac Mortgage Holdings, Inc. (IMHPRB)
Impac Mortgage Holdings, Inc. (IMHPRC)
Mesa Royalty Trust (MTR)
Schawk, Inc. (SGK)

Some firms make it on to more than one list, and some, like JRC and FMT, have already left for the "pink sheets"

Douglas A. McIntyre

Tough Market Cannibalizes Prices Of Weakest Companies (SIRI)(GRMN)(MOT)(DELL

247wallst — Sun, 13 Apr 2008 15:12:25 +0000

No rest for the weak in a market which even punishes mediocrity.

Several widely traded companies made new lows.

Firms with heavy debt and poor operating profit prospects were hit particularly hard. Sirius (NASDAQ: SIRI), which is still awaiting approval of its deal with XM Satellite (NASDAQ: XMSR), bottomed. So did Motorola (NYSE: MOT), which appears to be doing worse each quarter in core handset business. Journal Register (NYSE: JRC), the most troubled of the newspaper companies, spent part of the weak under $.20 and will be delisted this week.

Several stocks which are leaders in sectors which appear to be weakening also hit lows. Gannett (NYSE: GCI), part of the newspaper industry, found a new bottom as did PC market No. 2 player Dell (NYSE: DELL).

Stocks in some fields which had been hot up, up until recently, are beginning to be hurt, showing how fast a sector can disintegrate. GPS company Garmin (NASDAQ: GRMN) hit a 52-week low of $44.51 after being at $125.68 in late October of last year. Wall St. is worried that consumer electronics sales could be hurt by the recession and a number of cellphone companies are adding GPS functions to their products.

Douglas A. McIntyre

Journal Register, Unfit For Listing (JRC)

247wallst — Fri, 11 Apr 2008 16:31:44 +0000

Journal Register Co. (NYSE: JRC) has been given notice by the NYSE that its shares are slated to get booted off of the prestigious exchange. The NYSE said in its statement that the company failed the 30-day $1.00 average for 30 consecutive days. The exchange even cited its "abnormally low price" in the decision.

We have featured this one on numerous occasions via our own "stocks under $10" and the "Old Media / New Media" weekly newsletters as one that was going to buckle under its own weight. We’ve even started identifying which newspaper stocks might actually be worth buying at today’s prices and those should survive the digital migration. But just F.Y.I., Journal Register isn’t one of them.

Have you ever been on an airplane that lost it’s primary hydraulic system with over an hour left in your flight? It’s scary, trust me on that. The 52-week high is $6.48. It even used to be $15.00 and even over $20.00. This looks like a recapitalization is heading the company’s way in a hurry after shares closed at $0.265 today. That will be just as scary as losing the primary hydraulic system. The company waited far too long to explore its alternatives. We’ve even speculated last summer about the possibilities that the company would be at risk of servicing its debt.

We recently even noted that this stock could be one of the stocks that go to zero. Journal Register is hanging out with Elvis, Marilyn Monroe, Bogey, and James Dean. Yep, it’s the Boulevard of Broken Dreams.

You can join our open email distribution list to hear about special financings, secondary offerings, IPO’s, M&A, and more previews for other special situations in various stages.

There is nothing wrong with being listed on the pink sheets. Despite the fact that getting information becomes nearly impossible, and despite the issues of no one wanting to own pink sheet stocks, and despite the fact that many institutions are barred from owning pink sheet stocks… yep. Nothing wrong at all.

Jon C. Ogg
April 11, 2008

Jon Ogg produces the Special Situation Investing Newsletter. He can be reached at jonogg@247wallst.com and he does not own securities in the companies he covers.

Journal Register Finally Yells ‘Uncle!’ (JRC)

247wallst — Mon, 07 Apr 2008 13:49:12 +0000

Journal Register Company (NYSE: JRC) has finally announced today that it hired Lazard Freres & Co. LLC as its financial advisor to help the company evaluate strategic options.

It noted concern over the state of the economy and the environment for print advertising. Frankly, this is a boondoggle of epic proportions. To top it off, last week it was given potential NYSE delisting notice.

The company tries to make at least some shinola out of an the current environment:

It generated $90.3 million of EBITDA in 2007, above its $38.5 million interest expense; reduced debt by $105 million during 2007; has no scheduled principal payments due until Q2-2009.

We have covered the woes of this company in our "Old Media/New Media" weekly newsletter as one of the in-trouble companies for longer than we care to recall. The "alternatives" left at this point are few and far between now that management has waited this long to hire an advisor.

Shares are down a massive 64% today at $0.185. Before today, its 52-week trading range was $0.31 to $6.48. In 2004, this was a $20.00+ stock. But since that date, this company has been on a crash course to zero.

Jon C. Ogg
April 7, 2008

Jon Ogg can be reached at jonogg@247wallst.com; he produces the Special Situation Investing Newsletter and he does not own securities in the companies he covers.

Data Differentiates Newspaper Vs. Online News Reader Characteristics (SCOR, JRC, MNI, NYT, JRN, GCI)

247wallst — Thu, 13 Mar 2008 17:20:04 +0000

If you have read any of our commentary or probably most other commentary online, you know that newspapers are not exactly the next growth engine in the economy. In fact, they are probably losing the same percentage of their client base at the same rate as Southern California loses smokers. Tonight we saw a report out of comScore (NASDAQ: SCOR) that outlines some of the differences between online news readers and newspaper readers. You can read that full report from comScore here.

We actually run a newsletter called the "Old Media/New Media Newsletter" here that our own Doug McIntyre produces each week. We make the case for or against certain media properties such as newspapers, radio, cable, television, and the internet. Believe it or not, we actually just covered some newspapers that we identified as survivors. Sure some we covered as likely funeral candidates as well. This went out Sunday night to our readers and we’ve just taken it off embargo if you would like to read a copy.

Companies mentioned in the report are Journal Register (NYSE: JRC), McClatchy (NYSE: MNI), Journal News (NYSE: JRN), Gannett (NYSE: GCI), The Washington Post (NYSE: WPO), and the New York Times (NYSE: NYT). Not all of those are buys, but some will actually survive the secular trend working against the sector. Take a Test ride.

Jon C. Ogg
March 13, 2008

Short Sellers Take Long Knives To Newspaper Stocks (MNI)(JRC)

247wallst — Fri, 07 Mar 2008 08:49:56 +0000

Short sellers went after newspaper chains with a vengeance based on data from the NYSE as of February 29. The coverage ratio for Journal Register (NYSE: JRC) hit 52 days. The stock trades at $.80 down from a 52-week high of $7.08.

At McClatchy (NYSE: MNI), the number of days to cover its short position based on average volume moved to 28 days. McClatchy trades at $9.07 down from a 52-week high of $35.97.

Both newspaper companies recently had negative changes in their debt by credit ratings agencies.

Douglas A. McIntyre

Corporate Bankruptcies Likey To Take Sharp Jump (CHTR)(MNI)(JRC)(LVLT)

247wallst — Sat, 01 Mar 2008 06:26:48 +0000

It should come as no surprise that companies which has taken on too much debt over the last three years will start to fail and have to file for Chapter 11. Some of the signs that this process is about to accelerate are starting to show up.

"High-yield debt sales have sputtered so far in 2008 and are off to their weakest start in 17 years thanks to an anemic U.S. economy, a worldwide credit crunch and a pronounced absence of investor appetite for risky assets," according to Reuters.

While there is no saying which companies might face severe problems certainly several firms with widely traded stocks are at risk. This would include newspaper companies McClatchy (MNI) and Journal Register (JRC) which have high debt and rapidly falling revenue. Cable company Charter (CHTR) is saddled with $19 billion in long-term debt. Level 3 (LVLT) has a shaky balance sheet and extremely modest cash flow. Shares sold short in the firm are higher than those of any other stock listed on Nasdaq.

Douglas A.McIntyre

The 52-Week Low Club (FMT)(RHD)(S)(JRC)(LLNW)(IACI)

247wallst — Fri, 29 Feb 2008 16:13:44 +0000

Fremont General (FMT) Threatens more write-downs. Falls to $.73 from 52-week high of $13.80.

R H Donnelley (RHD) Downgrades after poor earnings. Hits bottom of $6.26 from 52-week high of $84.49.

MF Global (MF) Still falling after trading loss. Drops to $14 down from 52-week high of $32.20.

Sprint Nextel (S) Still being punished for earnings. Falls to $7.08 from 52-week high of $23.42.

Journal Register (JRC) Newspaper company. Falls to $.78 from 52-week high of $7.23.

Limelight Networks (LLNW) Loses patent suit. Sells off to $3.82 from 52-week high of $24.33.

IAC Interactive (IACI) Underperforming e-commerce company. Drops to $19.76 from 52-week high of $39.06.

Douglas A. McIntyre

The 52-Week Low Club (S)(NT)(GCI)

247wallst — Thu, 28 Feb 2008 16:17:03 +0000

Nortel (NT) Nine-to-one this dog never hits bottom. Down to $9.05 from 52-week high of $30.

Mylan (MYL) Market unhappy about quartery results. Sells off to $12 from 52-week high of $22.90.

Gannett (GCI) Newspaper companies in flat spin. Drops to $30.26 from 52-week high of $61.68.

Sprint (S) drops dividend and loses a ton of money. Dips to $7.75 from 52-week $23.42.

Journal Register (JRC) Another newspaper down for the count. Sell down to $1.07 from 52-week high of $7.23.

EpiCept (EPTC) Europe drug authority turns down product. Drops to $.87 from 52-week high of $4.89.

Neurogesx (NGSX) Bad trial data. Falls to $3.62 from 52-week high of $10.99.

Borland Software (BORL) Rough earnings. Down to $1.93 from 52-week high of $6.22.

Douglas A. McIntyre