The McClatchy Company’s prospects are looking up, just a year after investors seemed to expect the newspaper publisher to go bust. The company is marketing $875 million of bonds this week. But investors should be cautious. McClatchy’s recent performance will be tough to maintain.
The company has cut its work force and reduced pension costs. In the fourth quarter of 2009, operating expenses fell a third from the period a year earlier. And digital advertising revenue rose 15 percent compared with 2008, offsetting some declines in print advertising.
The stock recovered from levels that reflected bankruptcy expectations — 40 cents a share in the middle of last year — to $5.51 on Monday. But online ads make up only 16 percent of total ad revenue. So revenue from ads in McClatchy’s newspapers, including The Miami Herald, The Sacramento Bee and The Fort Worth Star-Telegram, was still a fifth lower in the quarter. The worry is that the company can’t cut costs fast enough to bridge the time it will take to replace print ad revenue with digital sales.
Assume that digital ad revenue continues its trajectory and an economic rebound helps print advertising so that the overall decline in advertising revenue slows to 10 percent annually. With expenses remaining at current levels, McClatchy’s earnings before interest, tax, depreciation and amortization, or Ebitda, could still fall by more than 30 percent by the end of 2011.
In that case, its debt-to-Ebitda ratio would soar to more than eight to one, from five to one now, and interest expenses would absorb over 40 percent of operating income.
Monday, February 1, 2010
Saving Media
Healthcare Payor Results: HUMANA
Health insurer Humana Inc. posted a 44 percent jump in fourth-quarter profit Monday as its robust Medicare Advantage business drove higher government income, offsetting a slumping commercial segment dragged by the sluggish economy.
Louisville-based Humana also raised its 2010 earnings projection to a range of $5.15 to $5.35 per share, up from $5.05 to $5.25. Analysts expected a higher profit of $5.40 per share, according to Thomson Reuters.
Shares of Humana edged up 9 cents to close at $48.71 Monday.
The company's government segment posted pretax income of $452.3 million in the fourth quarter, up from $267.3 million a year earlier. The increase was due in part to lower claims expenses in its Medicare prescription drug plans and higher Medicare Advantage membership.
The health insurer earned $250.7 million, or $1.48 per share, for the period ended Dec. 31, meeting analysts' estimates. That's up from $174.1 million, or $1.03 per share, in 2008.
Revenue grew 2 percent to $7.63 billion but missed Wall Street's view of $7.78 billion.
For the full year, Humana earned $1.04 billion, or $6.15 per share, up nearly 61 percent from the previous year. Revenue grew 7 percent to $30.96 billion.
Dr Reddys signs Glaxo to give it a new pipeline
GSK Signed up with Dr Reddys for 100 drugs in 06/2009 ( no cash has changed hands)
GlaxoSmithKline (GSK) today signed an alliance with Dr Reddy’s Laboratories, an Indian generic drug maker, in its latest step towards building its business in emerging markets and copycat drugs.
The deal gives GSK access to Dr Reddy’s portfolio and future pipeline of more than 100 branded pharmaceuticals in areas including cardiovascular, diabetes and oncology. The first products are expected to reach the market in the second half of the year, with Mexico likely to be the first country.
The tie-up is chief executive, Andrew Witty’s latest move to expand in emerging markets and generic drugs, which can be sold as brands in poorer countries. The deal comes just six months after the drug giant signed an agreement with China’s Shenzhen Neptunus for flu vaccines and follows a collaboration with South Africa’s Aspen and last year’s purchase of Bristol-Myers Squibb’s mature business in Egypt.
Drug sales in emerging markets are expected to grow at a mid-teens percentage rate through 2013, against low single-digits for mature markets, according to IMS Health, a tracker of prescription drug data.
GSK gets R&D cuts 12000 jobs
The extent to which the recession has cut into high-value research and development jobs in the pharmaceutical industry will be laid bare this week as job losses in the industry climb to 12,000.
GlaxoSmithKline (GSK), the British drugs group, will announce plans on Thursday for further restructuring with the loss of 4,000 jobs, of which nearly half will be in GSK’s research and development centres.
The company employs 99,000 people, of whom 16,000 are located in the UK. The global job cull is likely to be felt in Britain, where the company has six R&D sites. The move will follow that of AstraZeneca, which last week announced a global job cut of 8,000 workers, of whom 3,500 are employed in R&D.
GSK’s third restructuring effort since 2007 will heighten fears in the medical research establishment that the recession is beginning to affect high-value scientific and technical jobs.
GSK will disclose plans for the upheaval when it announces its annual profits for 2009, which analysts believe will exceed £8.5 billion. The new round of cost cuts will raise the company’s target of costsavings from £1.7 billion, announced a year ago, to more than £2 billion. The company is also expected to increase provisions for restructuring, which total £3.6 billion at present, of which three quarters are cash costs. It will scale down activities at research facilities in Britain, across Europe and in the United States as it builds its activities in emerging markets.
The job attrition at the medical research coalface reflects widespread unease in pharmaceuticals companies about the loss of revenues from a small number of blockbuster medicines. This year GSK will lose patent protection for Seretide, an asthma treatment worth $4 billion (£2.5 billion) to the company, and AstraZeneca is facing the imminent patent expiry on Arimidex, a breast cancer drug that generated $878 million in sales last year.
Adding to their problems, the pharmaceuticals groups face a European Commission inquiry into allegations that they are delaying the arrival of generic medicines by offering payments to rival manufacturers. In response, the companies are seeking efficiencies in their labs, with greater focus on targeted areas of research.
AstraZeneca said last week that it would seek to outsource more of its research. The company is transferring almost all its manufacturing of pharmaceutical ingredients to a facility in China.
GSK started reshaping its business in 2007 by focusing on three areas: vaccines; consumer healthcare, including over-the-counter medicines and non-medical products, such as Lucozade and Horlicks; and emerging markets. The shift towards consumer products and emerging markets also reflects the group’s concern that it faces more cuts and penny-pinching among national healthcare buyers.
This will have ramifications for the R&D activities of all the big companies in the sector. “Their strategy is to diversify and to move away from work on small molecules,” one industry insider said.
GSK will be diverting investment away from pure research and towards products that will enable the company to catch a greater share of the consumer dollar. The focus on emerging markets will entail more investment in branded products that treat curable illnesses rather than in funding research into new medicines for incurable diseases.
Thursday, January 28, 2010
The older recall: Toyota
Toyota had no choice but to stop selling eight different models while it works out a way to fix what the National Highway Traffic Safety Administration has called “a dangerous accelerator pedal issue.” nytimes, 28 jan chrisThe September Safety Bulletin from Toyota.com
safety very seriously. It believes its vehicles to be among the safest on the road today.
Recent events have prompted Toyota to take a closer look at the potential for an accelerator pedal to get stuck in the full open position due to an unsecured or incompatible driver's floor mat. A stuck open accelerator pedal may result in very high vehicle speeds and make it difficult to stop the vehicle, which could cause a crash, serious injury or death.
Toyota considers this a critical matter and will soon launch a safety campaign on specific Toyota and Lexus vehicles. Throughout the process of developing the details of the action plan, it will advise the National Highway Traffic Safety Administration (NHTSA).
Until Toyota develops a remedy, it is asking owners of specific Toyota and Lexus models to take out any removable driver’s floor mat and NOT replace it with any other floor mat. The following models are affected:
• 2007 – 2010 Camry
• 2005 – 2010 Avalon
• 2004 – 2009 Prius
• 2005 – 2010 Tacoma
• 2007 – 2010 Tundra
• 2007 – 2010 ES350
• 2006 – 2010 IS250 and IS350Should the vehicle continue to accelerate rapidly after releasing the accelerator pedal, this could be an indication of floor mat interference. If this occurs, Toyota recommends the driver take the following actions:
First, if it is possible and safe to do so, pull back the floor mat and dislodge it from the accelerator pedal; then pull over and stop the vehicle.
If the floor mat cannot be dislodged, then firmly and steadily step on the brake pedal with both feet. Do NOT pump the brake pedal repeatedly as this will increase the effort required to slow the vehicle.
Shift the transmission gear selector to the Neutral (N) position and use the brakes to make a controlled stop at the side of the road and turn off the engine.If unable to put the vehicle in Neutral, turn the engine OFF, or to ACC. This will not cause loss of steering or braking control, but the power assist to these systems will be lost.
-If the vehicle is equipped with an Engine Start/Stop button, firmly and steadily push the button for at least three seconds to turn off the engine. Do NOT tap the Engine Start/Stop button.
-If the vehicle is equipped with a conventional key-ignition, turn the ignition key to the ACC position to turn off the engine. Do NOT remove the key from the ignition as this will lock the steering wheel.
In the event owners choose not to remove their floor mat, Toyota strongly recommends that they ensure that the correct floor mat is being used, that it is properly installed and secured, that it is not flipped over with bottom-side up, and that one floor mat is not stacked over another. Information on proper floor mat installation can be found onhttp://www.toyota.com and http://www.lexus.com.
Owners with questions or concerns, are asked to please contact the Toyota Customer Experience Center (1 800 331-4331) or Lexus Customer Assistance Center (1 800 255¬3987), or consult the information posted at http://www.toyota.com andhttp://www.lexus.com.
September 29, 2009
The Toyota Recall
THE TOYOTA RECALL
Jan 28, BW(BLOOMBERG)
Toyota Motor Corp., the world’s largest carmaker, fell in Tokyo as it expanded a U.S. recall by more than 1 million vehicles to 5.35 million, adding to concerns its reputation for quality may be permanently tarnished.
The shares dropped 3.9 percent to 3,560 yen, capping a fifth day of declines, the longest losing streak since May 2009. The stock has dropped 15 percent since Jan. 21, when Toyota announced a separate recall of 2.3 million U.S.-built vehicles after finding a pedal flaw linked to unintended acceleration.
Jan 27
All in all 8 models have stopped production across US plants
Toyota’s market capitalization has fallen to about 12.3 trillion yen ($136 billion) from about 12.9 trillion yen on Sept. 15, when it notified U.S. dealers to inspect how floor mats are installed on models after four people were killed in an accident. Today’s trading volume of 38.6 million shares was a record for the stock, according to data compiled by Bloomberg.
Models
The company said Jan. 26 it would suspend the U.S. sale and production of eight models involved in the Jan. 21 recall. Those models account for more than half its deliveries in the country and include its top-selling Camry and Corolla cars.
Models that were added yesterday to the November recall are 2008-2010 Highlander sport-utility vehicles; 2009-2010 Corolla compact cars; 2009-2010 Venza wagons; and the 2009-2010 Toyota Matrix hatchback. General Motors Co.’s 2009-2010 Pontiac Vibe, a version of the Matrix, is also to be recalled, said Martha Voss, a Toyota spokeswoman.
Pampers on Conusmerism, Toyota Recall
Every couple of months, we can reliably count on a big brand to help us learn a lesson about online reputation management. Today, we give thanks to P&G for today’s lesson:
The conversation starts when your customers say so, not you!
As AdAge reports, P&G has launched what it considers to be the most significant improvement in its Pampers line of diapers, in 25 years. Unfortunately, the company decided to start shipping the new diapers in old packaging, without explaining the benefits of the new pooper-protector.
Engineering this manufacturing overhaul meant putting the new diapers into the old packaging and into stores starting last summer in parts of the country. But because the new diapers had only reached a fraction of the U.S. by fall, P&G wasn’t ready to launch its campaign. Without marketing or communication, some consumers in early markets reacted strongly and spread the word virally to markets that did not yet have the diaper.
OK, who does that?
In this day and age of socially connected consumers; who launches a dramatically different product without also readying a TV, print, search, and social media campaign?
OK, maybe I’m being too harsh. Maybe P&G just didn’t realize that it was heading towards such a consumer backlash…
"Similar to our experience in the past, when you change things, without articulating what the change is about, you will get consumers who complain," said Jodi Allen, VP-North American baby care at P&G.
[Jon Stewart'esque pause]
What the…??? You knew you’d get this consumer backlash??? Then why didn’t you have a plan in place to explain the benefits of the new diaper. Why didn’t you have a Twitter channel to answer questions from concerned parents? Where was the Facebook FAQ page to explain how the product will improve the lives of parents–and their babies?
If you’d taken the time to do the above, Rosana Shah of Baton Rouge, La, wouldn’t have felt compelled to launch her own Facebook page to warn other moms…
"…they’ve slipped this inferior diaper into the existing packaging without notifying the consumer."
At this point you could argue that this Pampers backlash is just a small minority. After all, the"Bring Back the Old Cruisers" fan page on Facebook had only 20 members as of last week. But, I’d point to the fact that new parents trust the opinions of experienced parents AND this "backlash" has now reached a wider audience–thanks to AdAge, and now us.
Fortunately, P&G doesn’t plan to just sit back and let a few upset consumers have their way…
Ms. Allen believes the tone will change quickly once P&G turns on marketing support, which will include a first-ever, pre-launch buzz campaign starting this month.
OK, that’s all well and good Ms. Allen, but you should have had this in place the moment you shipped your first revolutionary diaper. Heck, two months before you shipped it!
So, thank you P&G. Thank you for being yet another mega-brand that, despite its millions in marketing budget–and expert marketers to boot–failed to realize one of the most important lessons in reputation management.
You don’t get to decide when the conversation about your new product starts. So be prepared from day one!