Randomly Noted

Standard & Poor’s made some tweaks to its S&P 500 stock index in the U.S. based on market cap sizing. But when you look at the companies headed into the index – and those headed out – it makes a statement about how much the corporate world we live in has changed.

On its way out is Eastman Kodak, a company that didn’t see the digital revolution coming to the camera and film business and moved too late to try to recapture a business it owned. Also is out is warehouse superstore Office Depot who has lost business to placed like Amazon. And then there is the old gray lady, the New York Times. The newspaper business has been in a recessoin much longer than our economy has been in one.

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Interesting: the top two bosses of the New York Times Co. got big 2009 pay raises. NYT Chairman Arthur Sulzberger Jr.’s pay more than doubled to $6 million; CEO Janet L. Robinson got $6.3 million – 32% more than a year earlier. Granted, the NYT’s share price has nearly tripled over the past year, and the top honchos got pay cuts in 2008. Then again, the bald fact is: the NYT is a troubled newspaper-focused company. It lacks the Washington Post Co.’s lucrative Stanley Kaplan education unit and Pearson’s textbook publishing business not to mention its premium-subscription financial information operations. It will be interesting to see how Sulzberger defends his payout.

The old gray lady reported financial results today and while the company heralded some signs of improvement in its press release, it remains clear that the New York Times faces some serious challenges ahead. Operating profits rose in the 4Q 10.9%. And while sales were off 11.5%, the NYT noted that decline is an improvement from the 16.9% 3Q declines from its year-ago period. So, while sales are still off, the trend line is headed in the right direction. But other numbers indicate more challenges ahead. Print ad sales were off 20% (there was an 11% rise in digital ads). The company sees advertising remaining weak in the 1Q. The company reported net income of $90.9 million. But make no mistake where a lot of that profit came from – cost cutting (production costs are down 27.1%) and freezing the pension plans. The freeze alone accounted for a $32.4 million after-tax gain. And speaking of the pension plan, it is now underfunded by about $420 million. That gap has increased from the $300 million a year ago. The company has been paying down debt and has been looking to asset sales to help on that front – it sold its classical radio station in NYC and has put the Boston Red Sox baseball team up for sale. But those are only short-term money-raising fixes.

People involved in legal travails often say they want to settle the thing in court rather than in the court of public opinion. But when you run a well-known company, especially one based on public trust, maybe you have to keep it high profile.

In any case, that’s how it is going for Charles Schwab Corp., accused by New York Attorney General Andrew Cuomo of allegedly having misled investors in auction-rate securities, a market that seized up during the worst of the credit crisis, freezing investors’ money in what were widely considered safe and liquid investments.

As noted earlier in this blog, Schwab founder and chairman, the well known Charles Schwab, took to the op-ed pages of The Wall Street Journal Aug 19 with a defense of his firm in the auction-rate securities scenario and a more general railing about the dangers of too much government or litigious paternalism cutting off the investment choices of self-directed individuals.

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My parents kept WQXR-FM 96.3 classical radio on all day when I was growing up in Parsippany, New Jersey, in the 1960s and ’70s. We left the area in 1977 and it wasn’t until last month – when I returned to the Garden State after many years abroad – that I was once again in earshot of the station. It brought me back to the old days in a bittersweet way, as my father, the primary classical-music aficionado in our family of four, died last year. WQXR, which has broadcast classical music for 73 years, was owned by The New York Times – until now. Today, the Times announced it’s selling the QXR call letters and brand to WNYC Radio, and selling the powerful 96.3 license and signal to Univision Radio. WQXR will be heard via the less robust 105.9 signal. WNYC is paying the Times $11.5 million, Univision $33.5 million. It’s all part of the New York Times’s efforts to raise money via asset sales and outlast the media industry rout. I’m relieved the classical station will survive, but a bit worried by this phrase in a WSJ story: “… with the weaker signal the station will now have, many fans might not be able to hear it. The signal won’t be as strong as it is at present in parts of Long Island and New Jersey, for example.” Here’s the entire piece: http://online.wsj.com/article/SB124759782651440445.html

News flash: Bank of America will need $35 billion (BILLION) in additional capital – which is a lot more than people expected the so-called government “stress tests” would require. The news has given the yen a boost this morning in Asia and is pushing down U.S. stock futures. With Tuesday’s U.S. stock market already showing signs investors are losing confidence, expect a lousy Wednesday. http://online.wsj.com/article/SB124158058615290821.html#mod=testMod Continue reading…

The newspaper business is struggling to find a new business model. Quality news gathering costs money – lots of money. You need reporters in lots of places and good editors working with them. In the past, advertising spots in papers helped pay for that reporting. But companies are evaluating conventional and traditional advertising conventions i.e. questioning how successful it is for them. So, until a newspaper figures out a new business model, if it loses ad dollars it needs to either cut costs and/or raise the price of the paper. The Financial Times is reporting that the Sunday New York Times will now cost $6 (up from $5) and the daily NYT may go up to $2 (from $1.50). Short term, there is no choice. Longer-term – the news business has to find a way to reach the Gen Y crowd. I have a niece graduating with honors from UVA and headed to Med School in a year or so (she had strong scores on her MCATs but wants a little time off). She gets her “news” through social networks. News organizations have a lot of creative work in front of them…

A sweet NYT story documents the disappearance of college cafeteria trays. http://www.nytimes.com/2009/04/29/nyregion/29tray.html?_r=1&hp

For me, memories of college, cafeterias, weight, body image,  stress and exercise are all intermixed, as they surely are for so many women who are or once were in their late teens or early twenties; living on their own for the first time; contending with social and academic pressures; and confronting gustatory temptations on- and off-campus day and night. In the autumn of my freshman year, I lost the 15 or so pounds I’d been battling throughout high school – only to gain about 40 pounds that spring, gorging on late-night pizza during late nights at the campus newspaper. Junior year saw substantial weight loss to the point where a campus doctor warned she’d diagnose me as “borderline anorexic” if I didn’t start gaining pounds. Continue reading…

Is China’s influence in Washington, D.C., waning as it buys fewer Treasurys? The New York Times made this assertion in Monday’s editions.(http://www.nytimes.com/2009/04/13/business/global/13yuan.html?_r=1&ref=business)

It didn’t make sense to us, based on the facts, and it prompted Marc Chandler of Brown Brothers Harriman to send out a research note titled, “NY Times Misunderstands China’s Reserves Data.” China’s reserves declined in January and February before rising in March. Chandler observes that what the NY Times seems to have done is link two months of falling reserves to a purported decline in U.S. bond holdings, while forgetting that not all of China’s bond investments are from the U.S. and failing to factor in currency fluctuations during the first quarter. So, the Times leaves   “the impression that China sold Treasuries in Q1 09″ whereas  “there is no compelling evidence that this is true.” Chandler cites evidence that China’s Treasury holdings actually rose in January even as reserves fell sharply and challenges the validity of another Times assertion – that investors shipped big sums of money out of China earlier this year amid worries about the economy.  Interesting, the thrust of the Times story seems to be that Washington gained clout as China purportedly shifted away from Treasurys in January and February, thereby making the U.S. less dependent on Beijing by diversifying the country’s investor base. This is viewed as a positive for the U.S. At the same time, though, the newspaper forgets that many in the U.S. fear precisely what the Times says is a boon – a move by China away from its gargantuan investment in U.S. securities that could destabilize the American economy. All in all, a high-profile newspaper article that caught our – and our readers’ attention – but shouldn’t be viewed as relevant to investors.

Please pardon a brief digression into geopolitics but mark my words: New York Times columnist Roger Cohen’s latest Iran-Israel diatribe, er, column, will prove his most controversial yet. If you think I’m exaggerating – in light of the kerfuffle his other recent writings have spurred – check out this, the last sentence of today’s installment: “Israeli hegemony is proving a kind of slavery. Passage to the Promised Land involves rethinking the Middle East, starting in Iran.” A peculiar thing to write during the Passover holiday. Here’s his column titled “Israel Cries Wolf”: http://www.nytimes.com/2009/04/09/opinion/09iht-edcohen.html?_r=1