The Times-Picayune of New Orleans is owned by Advance Publications, which in turn is owned by the uber-rich Newhouse family. Advance announced it would cut back printing and delivery of the paper to three days a week — Wednesday, Friday and Sunday. Advance also will gut three other papers — the Birmingham News, the Press-Register of Mobile and the Huntsville Times. Advance has practice in “downsizing” papers. It made a similar move in 2009 in Ann Arbor, Michigan. The daily was cut in favor of AnnArbor.com.

The next move by the Newhouse family likely will be to take similar steps with three other big city dailies it owns — the Plain Dealer of Cleveland, the Star-Ledger of Newark and the Oregonian. In a little more than one wave of a hand, four large cities will be without dailies.

The notion that Internet versions of papers can tip the industry back toward success is a flawed. An examination of the financial results of the Washington Post Company (NYSE: WPO), the New York Times Company (NYSE: NYT), Gannett (NYSE: GCI) and deeply troubled McClatchy (NYSE: MNI) shows that online revenue remains a tiny part of overall sales. The New York Times newspaper operation announced a drop in digital sales of 2.3% last quarter. Digital advertising is now 22.5% of the group’s revenue. That is not nearly enough to stanch the sharp erosion of print ad revenue that has dropped sharply for a decade. And it is worth noting that the New York Times sites have by far the largest audience of any newspaper group in the country.

The impression that analysts who follow the industry have for now is that the biggest newspaper chains will not cut back the number of days they print their largest daily papers. Newspapers that are more than 100 years old can be maintained by plans to lower circulations and charge loyal customers more for their subscriptions. That is only a delaying tactic. Nothing can entirely offset disappearing print advertising.

It is inevitable that large dailies in more and more cities will cut the number of days that they print newspapers, except in metropolitan areas where Warren Buffett owns the properties.

Douglas A. McIntyre

News came on Thursday morning that Berkshire Hathaway Inc. (NYSE: BRK-B) (NYSE: BRK-A) has reached a deal with Media General, Inc. (NYSE: MEG) to buy all of Media General’s newspapers outside of the Tampa paper.  Buffett is joining a sector that has wrecked many private equity firms looking for deals over the last decade in printed news.  The price tag is listed as $142 million in cash, but Berkshire Hathaway will simultaneously issue a $400 million term loan and a $45 million revolving credit line.

Today’s news is likely to bring a focus on other newspaper outfits around the nation.  Some companies with high concentrations in newspapers are Gannett Co., Inc. (NYSE: GCI), The McClatchy Company (NYSE: MNI), Daily Journal Corp. (NASDAQ: DJCO), A. H. Belo Corporation (NYSE: BLC), Lee Enterprises Inc. (NYSE: LEE).

Berkshire Hathaway also owns 1.7 million shares of The Washington Post Company (NYSE: WPO), although Warren Buffett does not hold a board seat any longer.  Does it beg the question, “Does this increase or decrease the value of The New York Times Company (NYSE: NYT)?”…

Media General will also issue Berkshire Hathaway ‘penny warrants’ for approximately 4.6 million Class A shares and that will give Buffett the right to buy 19.9% of Media General’s existing shares outstanding. Berkshire Hathaway also has the option to nominate a director to Media General’s board of directors.

The newspaper sale includes websites and mobile applications and these outfits have commercial printing businesses as well.  These include 63 daily and weekly titles in Virginia, North Carolina, South Carolina and Alabama.

Dare we say Buffett is back to his paper route he had as a teenager?  Mr. Buffett said, “In towns and cities where there is a strong sense of community, there is no more important institution than the local paper.  The many locales served by the newspapers we are acquiring fall firmly in this mold and we are delighted they have found a permanent home with Berkshire Hathaway.”

The move will allow Media General to focus on the broadcast television business, which accounted for some 77% of its 2011 platform cash flow in 2011.

Media General closed at $3.14 on Wednesday and its 52-week range is $1.14 to $6.84.  Its shares are indicated up about 40% around $4.75 in early indications.  With this newspaper and media outfit up so much, it may be safe to expect that other newspaper outfits could be worth more money than their battered shares indicate.

JON C. OGG

Also, keep in mind that portfolio managers Todd Combs and Ted Weschler are still new and those new positions of under $200 million $300 million are likely tied to them.

24/7 Wall St. has gone through line by line of each position to see which stocks have been bought and sold as new positions, as well as having added in whether or not the number of shares grew or shrank on each since the prior quarter. We had added some color in on some of the positions if applicable.

Be advised that the number of subsidiaries that this filing covers is 14 entities rather than 18 entities in the prior quarter. There is also a note in the 13F filing showing that the SEC has granted “Confidential Treatment” on some Berkshire stock holdings and that likely suggests that Buffett is still acquiring a position he does not want the public to know about yet. This filing does not signal the half-dozen or more European shares that Buffett said he bought so that remains an outstanding issue as well.

The value of the stock portfolio was $66,151,587,000 at the end of 2011 and this was listed as $75,300,250,000 at the end of March 2012.

American Express Co. (NYSE: AXP) was over 151.6 million shares, SAME AS last quarter.

Bank of New York Mellon Corp. (NYSE: BK) is now 5.6 million shares, HIGHER THAN the 1,793,915 shares last quarter.

CVS Caremark Corporation (NYSE: CVS) is the SAME SIZE at 7.106 million shares after having been a new holding in a recent quarter and having been raised one quarter ago.

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 in past reports.

Costco Wholesale (NASDAQ: COST) 4,333,363 Shares, SAME AS last quarter after having lowered it before.

Da Vita Inc. (NYSE: DVA) is now 6 million shares worth $541 million and that LARGER THAN BEFORE after having been a new position of 2.684 million shares.

DirecTV (NASDAQ: DTV) is a LARGER POSITION listed at 22.999 million worth over $1.13 billion. This one had been 20.348 million shares worth $870 million one quarter earlier and it had been a new position just two quarters ago at 4.249 million shares.

Buffett and Newspapers

Warren Buffett surprised investors when he said Berkshire Hathaway (NYSE: BRK-A) may buy more newspapers. It already owns the daily in Buffalo and recently bought the paper in Omaha, which is where his conglomerate is headquartered, for $200 million. Buffett may view newspaper ownership as an inexpensive hobby, at least inexpensive for a company the size of Berkshire Hathaway. It is just as likely that he sees a bottom in the industry. He has had a ringside view of newspapers for some time. He was an investor in the IPO of the Washington Post Company (NYSE: WPO) and sat on its board for years. Buffett also can see that revenue erosion in the industry has slowed or at some chains stopped. Cost cuts have made margins at least tolerable. Among the stocks of the largest newspaper chains, several appear to have stopped sliding. This is the case with the New York Times Company (NYSE: NYT), Gannett (NYSE: GCI) and even battered McClatchy (NYSE: MCI), which is heavily burdened with debt.

Facebook IPO Road Show

The Facebook IPO road show has begun. Based on news accounts, the most important part of the event is that CEO Mark Zuckerberg wore a hoodie, jeans and sneakers to the first large presentation to investors. The argument to set the social network company’s value at an extraordinary $96 billion must be less important. Zuckerberg and Facebook did get an early break, before their presentations even began. Stock research firms Wedbush Securities and Sterne Agee rated the shares a Buy and trumpeted Facebook’s strength — the problems of slowing growth and the lack of revenue from mobile platforms notwithstanding.

A New Lumia 900 Bug

Nokia’s (NYSE: NOK) flagship Lumia 900 had a software bug when it launched. This caused bad PR, but the problem was solved quickly. That was not the end of glitch problems. The smartphone has a second bug: its screen turns purple when its brightness is set low. The world’s second largest handset firm — which until late last year was the largest — promised to resolve the issue quickly as well. Nokia needs the product to be a success. The fortunes of the company have crumbled as Apple’s (NASDAQ: AAPL) iPhone and handsets that run Google’s (NASDAQ: GOOG) Android software have raced ahead of it in sales. The Lumia is also the first major collaboration between Nokia and its major software partner, Microsoft (NASDAQ: MSFT). Redmond has made a billion-dollar bet that Nokia’s broad distribution of handsets can push the Window mobile software into the market, where it currently has a single-digit market share.

Douglas A. McIntyre

It is just as likely that he sees a bottom in the industry. He has had a ring side view of newspapers for some time. He was an investor in the IPO of The Washington Post Company (NYSE: WPO), and sat on its board for years. Buffett can also see that revenue erosion in the industry as slowed, or at some chains, stopped. Cost cuts have made margins at least tolerable. Among the stocks of the largest newspaper chains, several appear to have stopped sliding. This is the case with The New York Times Company (NYSE: NYT), Gannett (NYSE: GCI), and even battered McClatchy (NYSE: MCI) which is heavily burdened with debt.

AT&T (NYSE: T) moves into the home monitoring market. (Reuters)

Ally Financial falls back into financial trouble. (Reuters)

LG Electronics will release a Google (NASDAQ: GOOG) TV later this year. (Reuters)

Lenovo to invest $800 million to move into mobile products markets. (Reuters)

The FDA could approve drugs to prevent healthy people from getting HIV. (WSJ)

India starts a Google antitrust investigation. (WSJ)

The “Avengers” will help press the results of Walt Disney’s (NYSE: DIS) movie studio higher. (WSJ)

Barclays (NYSE: BCS) will start a U.S. online bank. (WSJ)

The Oprah Winfrey Network may never make money. (WSJ)

Europe’s banks begin to hold cash again, wary of the region’s financials. (WSJ)

Berkshire Hathaway’s (NYSE: BRK-B) B shares underperform the market so far this year. (WSJ)

Wireless carriers spend less for smartphones, which means some costs will be passed to consumers. (WSJ)

The Washington Post Company (NYSE: WPO) continues to be hurt by flagging results at its Kaplan education division. (WSJ)

The United States will sell more of its shares in AIG (NYSE: AIG). (WSJ)

Rebates that stock exchanges provide brokers may hurt returns to individual investors. (NYT)

Many companies enter the business of using mobile phones for retail payments. (NYT)

The ad prices Facebook charges customers has risen by 20% recently. (FT)

Deals by big pharma to buy smaller rivals continue to be driven by patent expirations. (FT)

Douglas A. McIntyre

The unofficial closing bells put the DJIA down more than 168 points to 13,038.04 (-1.28%), the NASDAQ fell nearly 68 points (-2.25%) to 2,956.34, and the S&P 500 fell -1.62% or more than 22 points to 1,369.09.

There were several analyst upgrades and downgrades today, including LinkedIn Corp. (NYSE: LNKD) target price raised to $140 at Susquehanna; FedEx Corp. (NYSE: FDX) raised to ‘strong buy’ at Raymond James; The Allstate Corp. (NYSE: ALL) raised to ‘overweight’ at Barclays; Red Hat Inc. (NYSE: RHT) started as ‘outperform’ at BMO; and Saks Inc. (NYSE: SKS) reiterated ‘buy’ and target price of $14 at Argus.

Earnings reports since markets closed last night have led to some price changes as of the last half hour of trading today: First Solar Inc. (NASDAQ: FSLR) is down -6% at $16.98 after posting a new 52-week low of $16.80 earlier today (more solar coverage here); SunPower Corp. (NASDAQ: SPWR) is down -2.1% at $5.58; AES Corp. (NYSE: AES) is down -0.7% at $12.13 (more utilities coverage here); Duke Energy Corp. (NYSE: DUK) is up 0.9% at $21.60; Estée Lauder Companies Inc. (NYSE: EL) is down -5.8% at $60.44 (more coverage here); The Washington Post Co. (NYSE: WPO) is down -5.4% at $355.88; Exelon Corp. (NYSE: EXC) is down -0.7% at $38.54; and The Madison Square Garden Co. (NASDAQ: MSG) is up 3.7% at $37.87 after posting a new 52-week high of $38.38..

On Monday we get earnings from American States Water Co. (NYSE: AWR), Breitburn Energy Partners L.P. (NASDAQ: BBEP), Dendreon Corp. (NASDAQ: DNDN), Dish Network Corp. (NASDAQ: DISH), Louisiana Pacific Corp. (NYSE: LPX), Kid Brands Inc. (NYSE: KID), Jinkosolar Holding Co. Ltd. (NYSE: JKS), and Tyson Foods Inc. (NYSE: TSN).

Other standouts from today include the following stocks:

Einstein Noah Restaurant Group, Inc. (NASDAQ: BAGL) is up 19.9% at $16.84 after posting a new 52-week high of $17.68 earlier today. The bagel maker and restaurateur reported strong earnings and said it would begin to explore strategic options.

Dolby Laboratories Inc. (NYSE: DLB) is up 17.5% at $44.22. The company reported strong earnings and has signed a deal with Microsoft Corp. (NASDAQ: MSFT). More coverage here.

Body Central Corp. (NASDAQ: BODY) is down -47.8% at $15.11. The young women’s apparel seller reported poor earnings and forecast more of the same until at least back-to-school season.

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

• 11:30 a.m. – 3- and 6- month bill auction
• 3:00 p.m. – Consumer credit report

Your email address

subscribe

terms and conditions

Have a great weekend.

Paul Ausick

The US dollar index rose today, now up 0.11% at 79.221. The GSCI commodity index is down about -1.3% at 678.65, with commodities mixed on the small gains in the dollar. WTI crude oil closed down -2.6% at $102.54/barrel, and Brent crude trades down -1.84% at $116.02/barrel. Gold settled down -1.2% today, at $1,634.80/ounce.

The unofficial closing bells put the DJIA down nearly 62 points to 13,206.59 (-0.47%), the NASDAQ fell more than 35 points (-01.16%) to 3,024.30, and the S&P 500 fell -0.77% or nearly 11 points to 1,391.57.

There were several analyst upgrades and downgrades today, including Chesapeake Energy Corp. (NYSE: CHK) maintained as ‘buy’ but target price cut to $31 at BofA/ML and raised to ‘outperform’ at Bernstein; Level 3 Communications Inc. (NYSE: LVLT) reiterated ‘buy’ at SunTrust Robinson Humphrey and cut to ‘neutral’ at Piper Jaffary; Qualcomm Inc. (NASDAQ: QCOM) reiterated as ‘buy’ at BofA/ML; and Salesforce.com (NYSE: CRM) raised to ‘outperform’ with a $185 target price at Credit Suisse.

Earnings reports since markets closed last night have led to some price changes as of the last half hour of trading today: Diana Shipping Inc. (NYSE: DSX) is down -4.4% at $7.63; Corinthian Colleges Inc. (NASDAQ: COCO) is down -21.6% at $3.05; Apache Corp. (NYSE: APA) is down -3.7% at $91.99; Western Refining Inc. (NYSE: WNR) is down -2.6% at $18.42; YRC Worldwide Inc. (NASDAQ: YRCW) is down -8% at $6.79; Steve Madden Ltd. (NASDAQ: SHOO) is down -1.7% at $43.54; Sempra Energy (NYSE: SRE) is up 0.6% at $64.29 after posting a new 52-week high of $65.37 earlier today; Sara Lee Corp. (NYSE: SLE) is down -1% at $22.10; Royal Gold Inc. (NASDAQ: RGLD) is down -2.6% at $59.43 (more coverage here); Orbitz Worldwide Inc. (NYSE: OWW) is up 4.9% at $4.09; General Motors Co. (NYSE: GM) is down -2.3% at $22.42 (more coverage here); and MGM Resorts International (NYSE: MGM) is down -4.4% at $12.95.

Tomorrow we get earnings from AES Corp. (NYSE: AES), Cheniere Energy Inc. (AMEX: LNG), Duke Energy Corp. (NYSE: DUK), Estee Lauder Companies Inc. (NYSE: EL), Progressive Corp. (NYSE: PGR), and The Washington Post Co. (NYSE: WPO).

Other standouts from today include the following stocks:

Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR) is down -47.3% at $26.11. The company reported earnings last night, and lowered guidance. More coverage here and here.

Kensey Nash Corp. (NASDAQ: KNSY) is up 32.2% at $38.35. The company is being acquired by a Dutch firm for $360 million. More coverage here.

Herbalife Ltd. (NYSE: HLF) is down -12.7% at $46.02. The nutrition products company flubbed some questions at last night’s conference call. More coverage here.

Stay tuned for Friday. San Francisco Fed President John Williams is giving a speech. We have noted the following events on the schedule (all times Eastern):

• 8:30 a.m. – Non-farm payrolls
• 3:00 p.m. – Treasury STRIPS

Your email address

subscribe

terms and conditions

Paul Ausick

A quick check of seven of these for-profit schools shows that over the past five years only one is showing a profit: DeVry Inc. (NYSE: DV) is up 6.6% since April of 2007. For the same period, Apollo Group Inc. (NASDAQ: APOL) is down -29%, Career Education Corp. (NASDAQ: CECO) is down -77%, Corinthian Colleges Inc. (NASDAQ: COCO) is down -74%, Strayer Education Inc. (NASDAQ: STRA) is down -33%, and the Washington Post Co. (NYSE: WPO), owner of the Kaplan franchise, is down -50%.

Capella reported this morning that first quarter EPS came in at $0.82 on revenue of $109.4 million. The consensus estimates called for EPS of $0.78 on revenue of $110 million. In the same period last year Capella posted EPS of $0.90 on revenue of $111.35 million.

What hurt the company today is its enrollment forecast. Capella’s new student enrollments have fallen for six straight quarters, including a loss of -5% in the first quarter of 2012. The company’s CFO said in a conference call that Capella is “less optimistic” about enrollment growth throughout 2012, and that the company expects to see enrollment declines in “the high single-digit” range for the current quarter.

Contributing to the enrollment troubles at Capella and the others is recent legislation introduced into the US House of Representatives that would severely curtail the use of any federal money by the schools to advertise and market to potential students. The legislation would also apply to non-profit schools, but the impact would be greatest on the for-profits.

The legislation faces stiff opposition in both the House and the Senate and may well be defeated. That is not likely to not constrain future efforts to rein in the flow of federal dollars to for-profit schools.

Capella’s shares are down -9.6% at about noon today, at $31.12 in a 52-week range of $26.12-$54.86.

Paul Ausick

Alcatel-Lucent S.A. (NYSE: ALU) Maintained Sell with $2.00 target at S&P.

Amazon.com, Inc. (NASDAQ: AMZN) Started as Buy at ThinkEquity.

Apollo Group Inc. (NASDAQ: APOL) Cut to Hold at Argus.

ArcelorMittal (NYSE: MT) Raised to Neutral at BNP Paribas.

AT&T Inc. (NYSE: T) Cut to Neutral at Baird.

Cypress Semiconductor Corporation (NASDAQ: CY) Raised to Buy at Lazard (late Wednesday call).

Delek US Holdings Inc. (NYSE: DK) Raised to Outperform at Credit Suisse; named as value stock of the day at Zacks.

eBay Inc. (NASDAQ: EBAY) Started as Buy at ThinkEquity.

Express Scripts Inc. (NASDAQ: ESRX) Reiterated Buy and raised target from $65 to $67 at BofA/ML.

Google Inc. (NASDAQ: GOOG) Started as Buy at ThinkEquity.

HollyFrontier Corporation (NYSE: HFC) Cut to Neutral at Credit Suisse.

Janus Capital Group, Inc. (NYSE: JNS) Cut to Hold at Jefferies.

Las Vegas Sands (NYSE: LVS) Reiterated Buy and raised target from $60 to $65 at BofA/ML.

Logitech International (NASDAQ: LOGI) named Bear of the Day at Zacks.

Nordstrom Inc. (NYSE: JWN) Raised to Buy at Goldman Sachs.

Potash Corp. of Saskatchewan (NYSE: POT) Started as Buy at Stifel Nicolaus.

Verizon Communications Inc. (NYSE: VZ) Cut to Neutral at Baird.

The Washington Post Co. (NYSE: WPO) named Bull of the Day at Zacks.

Whole Foods Market, Inc. (NASDAQ: WFM) Cut to Neutral at Goldman Sachs.

Yahoo! Inc. (NASDAQ: YHOO) Started as Hold at ThinkEquity.

If you enjoyed the top analyst upgrades and downgrades, you can join our free email newsletter that includes analyst summaries each morning sent right to your inbox.  We also cover top issues such as IPOs, special financial exclusives, mergers and more. Sign up in the box below.

Your email address

subscribe

terms and conditions

JON C. OGG