Whatever Gannett’s strategy is in laying off a small portion of its newspaper work force yesterday, it didn’t play well on Wall Street. The media company cut 2% of its employees but none from its flagship, USA Today. The company blamed the country’s slow economic recovery.
Despite the layoffs, Gannett stock dropped 55 cents today in below-average trading to $13.61. That amounted to a 3.9% loss on a day the major market indexes — Dow, NASDAQ and S&P 500 — were down no more than .67%. Obviously the Gannett strategists were not looking for the usual short-term benefits of an upward bump in the stock price.
“The bad old days are here again,” wrote Jon Friedman, the media eyeballer for MarketWatch, noting Gannet’s move signaled more bad news for the industry. “The media industry has been rendered punch drunk by now. Its ancient business model is broken. It is an industry bereft of original solutions and is left hoping against hope that the iPad will lift all boats.”
Gannett’s competitors did not suffer nearly as much today. The New York Times Company lost 1.2% in its value, the Washington Post down 1%. News Corp was slightly up .23%.
Morningstar, a popular rating service, believes Gannett stock is over-valued as it is. Its fair market value for GCI is $13 and even that is subject to high uncertainty. Most investment services have the stock at “hold.” A few other advise to avoid it altogether.
It seems Gannett has no great plan for the future other than to cutback, cutback, cutback and hope the economy turns around soon.