Things are bad but still good

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After occasional lapses in recent years, Time Inc. Chairman-CEO Ann S. Moore is back to updating staffers every quarter-but employees could have used seatbelts while reading last week's internal memo, which whipsawed from ominous portents to gloriously good news and back again more than a few times.

"We expect our full-year performance to be below 2005," Ms. Moore said in the first paragraph. The company produced modest gains in the third quarter but is still fighting weak advertising at some big books.

More happily, Ms. Moore said and recorded their biggest months ever in September; and are headed for relaunches; more people visit sites than sites from any other magazine publisher; the company's core competency in editing and its powerhouse brands leave it well-positioned to play at the top of important categories such as sports and celebrity; and 2007 will see new investment in health, home and food projects online.

Just don't get comfortable. "It is a challenging time for our industry," Ms. Moore wrote, "from rapidly changing consumer behavior to a soft advertising market-so we are challenged for growth."

It's not that it's all bad: The Time Warner board believes in Time Inc. and sees it as a "vital and important" part of the portfolio, she noted. Only some things are scary. "It also remains critical that we reset our cost base in order to match the new realities of our industry," Ms. Moore said. "Last winter we undertook a major cost-saving effort, and we continue to look at various ways to reduce costs." That effort included layoffs affecting more than 400 people.

"We are also examining how to be more efficient in the new multiplatform publishing environment," she said, building to a sentence that perhaps best caught the note's high-and-low nature: "This may result in further difficult decisions and cost reductions, but it will also create new job opportunities-we will keep you posted on any developments."
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