Dow Jones Turns In Strong 2006 Results

Predicts Revenue Growth of 18% for '07

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NEW YORK ( -- Dow Jones, publisher of The Wall Street Journal, released strong full-year 2006 and fourth-quarter results this morning, helped mightily but not entirely by the $283 million sell-off of six community newspapers late last year.
Dow Jones CEO Rich Zannino
Dow Jones CEO Rich Zannino

In a research note, Merrill Lynch analyst Lauren Rich Fine said the company was faring better than most news concerns. "Dow Jones is one of the few publishers with an aggressive, proactive attitude that incorporates a variety of online strategies," she wrote. "Dow Jones has a number of levers it can pull, and it is seemingly doing just that balancing short- and long-term gains."

'Bucked print-industry trends'
"For the fourth quarter and full year 2006, we bucked print-industry trends and posted solid gains in revenue and earnings," CEO Rich Zannino said in a statement accompanying the financials. "This performance was driven by focused execution on our transformation plan and operating initiatives, in particular our organizational restructuring; 'Weekend Edition'; print ad sales and circulation revitalization; international print repositioning; Dow Jones Online growth, including MarketWatch; and aggressive cost management."

The company just awarded Mr. Zannino a bonus approaching $900,000 in shares and gave Wall Street Journal Publisher L. Gordon Crovitz almost $500,000 in shares. It has, on the other hand, cut costs with moves such as the introduction on Jan. 2 of a smaller-sized Journal, which should save the paper about $18 million a year, and plans to eliminate dozens of positions from its enterprise media group.

The company said it expects revenue to increase 18% to 20% this year, including mid-single-digit growth at the print Journal and a 20% jump in online ad revenue.

Fourth-quarter earnings
The company's fourth-quarter earnings increased to $2.30 per share, or $192.2 million, way above the 43 cents per share projected by analysts polled by Thomson Financial.

That figure, however, includes revenue from the sale of the local newspapers and other special items. Without those, Dow Jones posted net income of 47 cents per share, or $39.9 million. The company said at the time that it was selling the newspapers to redirect some investment from slow-growth old media to faster-growing digital publishing.

For all of 2006, Dow Jones recorded revenue of $1.78 billion, up 6.6% over 2005. Full-year earnings were $4.64 per diluted share, compared with 73 cents per share the year before. Excluding income from the newspaper sale and other items, earnings totaled $1.11 per share, up 13.3% from 98 cents in 2005.
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