Raising pressure on Dubow, Gannett stock plunges 5%, closing below $20, in broad market downturn

GCI shares were clobbered today in another painful stock market meltdown — falling 4.9%, and crashing through the psychologically important $20 threshold. There’s no telling where it’s headed next.

Shares closed at $19.83 on unusally high sales volume: More than 6.1 million shares changed hands vs. the daily average of 3.7 million shares, Google Finance says. GCI stock is now down a shocking 30% in the past month vs. a much smaller 9% decline in the S&P-500 Index, a broad measure of stocks overall.

Gannett had plenty of company: Every newspaper publisher’s stock fell, except for GateHouse Media‘s. For comparison, the S&P-500 Index fell 1.8% and the Dow Jones industrial average fell 1.5%. GCI’s tumble was third worst:

Earlier: Why Wall Street wants Gannett broken up

Imagining that ‘Dear Colleague’ e-mail
I know many of you are worried, and so am I. While I know a little about many things in Gannett, I am not expert enough to drill down into GCI’s finances to figure out what management may be contemplating next. Those sources have not come forward, yet.

But I’m sad to say that I’ve lately been imagining a “Dear Colleague” e-mail that you may receive at some point. I’ve seen hundreds of business stories over the last 22 years, quoting this nearly identical language. You need only insert [Gannett] for the company name to see what it would read like:

Dear valued [Gannett] colleague,

Today, your board of directors took several important steps designed to carry [Gannett] into a brighter future. We have accepted the resignation of Chairman and Chief Executive Officer [Craig A. Dubow] from the company and from the board. Also, your board has engaged Goldman Sachs to examine all of [Gannett]’s strategic alternatives, including significant asset sales.

We know this news is unsettling to you. But your board is committed to maximizing share . . . (and yada, yada, yada).

Are you a financial news/stock editor or reporter? I now need help dealing with Gannett’s stock price. If you could pitch in by writing something authoritative — analysis, Q&A — your increasingly nervous co-workers will appreciate it. E-mail me confidentially, using this link from a non-work computer; see Tipsters Anonymous Policy in the green sidebar, upper right.

[Image: Google Finance]

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30 Responses to “Raising pressure on Dubow, Gannett stock plunges 5%, closing below $20, in broad market downturn”

  1. Anonymous Says:

    Who would step in to replace him?
    I can’t think of anyone with the courage or foresight or leadership within the Gannett camp or for that matter other media companies.
    They are all burned out. Its the Wharton School types that screwed all of this up to begin with. Thanks to the lead from Curley and McCorky.

  2. Anonymous Says:

    Next they tell you “goodbye.”

  3. Anonymous Says:

    This would be wonderful for us!!! Dubow must GO!!!

    What does he tell his investors, board, employees, clients, partners???

    DUBOW MUST GO!!!!

  4. Anonymous Says:

    Two types worked well within Gannett. Those with balls who still fired people at will, and those without balls who still fired people at will.

    The local publisher never had a chance to expound great local journalism.

    Journalism left, and business followed. Now business is gone.
    Back to zero.

  5. Anonymous Says:

    Mike Coleman would fit the bill. I’m not even with Gannett anymore.
    One of the few decent people that ever graced Gannett. He retired.
    Too bad. Not many like him.

  6. Anonymous Says:

    Who cares which Gannettoid goes where? They are pieces on the chessboard.

    The real issue is this company is about ready to implode. There is blood in the water and the sharks are swimming.

    If the stock falls much farther, we’ll be lucky to even collect a paycheck and walk away with any pension money [frozen or not]
    And you can kiss goodbye the new and improved 401K plan. They won’t be able to fund it.

    This company will be broken up into many pieces by year end. Wall Street is going to demand it.

  7. rmichem Says:

    Gannett, must really need money> Got the bill, for next payment of Newsjournal> They raise the price(no surprise), but they post dated the bill, so that you would pay the new rate, for money YOU ALREADY PAID, and subscription services you have already received.

  8. Anonymous Says:

    Mike Coleman would be a great choice! and this comes from someone who has had nothing but shit to say about so many others on about dozen other posts! Class act.

  9. Anonymous Says:

    Cut the Executive Committee in half at all papers. Let the VP’s pull up their boots. Extra duty during difficult times. But instead more rank and file.

    Dubow will have to be forced out.
    No more lunch money.

  10. Anonymous Says:

    Institutional investors are such pussies. This is a stock that now has a price-to-earnings ratio around 4 and pays a dividend of more than 7% — and even its forward P/E is still under 6.

    You can easily make a case that even if the company made one-third of the profit it made in the last year, the stock is still a bargain.

    If Gannett can stabilize the business (no small feat, and it has less to do with the Web than it has to do with advertisers not spending any money on anything), this is getting close to screamingly-good-buy territory.

  11. Anonymous Says:

    Maybe so to the financial analysts.
    But McClatchy sells for $6…the third largest company. The big time former Knight Ridder…Miami, KC, and California, etc.

    The biggest, the brightest, and the best. Not looking so good for all of the millions paid to hq people.

    I love American business. All of those CEO’s of airlines, car manufacturers, and now newspapers.
    Paid millions to lose billions.

  12. Anonymous Says:

    “You can easily make a case that even if the company made one-third of the profit it made in the last year, the stock is still a bargain.”

    I see the point, but isn’t this exactly what Avi Ifergan was writing about in Seeking Alpha when he described GCI as a “value trap.”
    (http://seekingalpha.com/article/52678-gannett-co-value-bargain-or-value-trap)

    That is to say, it looks like a bargain on paper, but with no reasonable prospects for growth in the next year (or two or five or?), those big fat dividends look like a short-term way to hang onto shareholders, but a quick way to deplete the healthy cash flow that that keeps its credit rating at investment grade. How long can they keep wringing the sponge?

    When is the next div date? If there’s not a stampede for the exit the day after, I’ll be surprised.

  13. Anonymous Says:

    “good-buy territory” are you kidding? nice try Craig, it will continue to sink and never come back up.

  14. Anonymous Says:

    Can anyone answer this question. I’ve been trying to get an answer for awhile:

    How safe is:

    A. Pension
    B. 401k

  15. Anonymous Says:

    If it’s fallen this low now, think what it will be on July 16th.

  16. Anonymous Says:

    Nothing is safe…your pension, your 401k,your job.

    They will cut the dividend and probably have the worst hit to the stock on the 16th after they release the earnings (or lack there of).

    This business is declinig!!!

    Dubow has done a great job screwing us all!!!

  17. Anonymous Says:

    I’m the person who wrote the previous comment about the potential value of the stock price. The ‘value trap’ argument is a good one and an excellent rational argument against the stock, I think; everything else is just emotion, and there’s often opportunity in emotion.

    Having said that, you don’t see me pulling the trigger to buy shares, either.

    The people I really feel for (after the people who have been laid off) are the folks with big percentages of Gannett stock in their 401Ks. What’s happening here is a prime exampel of why, as so many people have said, you must sell your company 401K stock match, in good times and bad, no matter what company you work for. You never know when the trap door is going to spring open.

    And finally: One of my favorite sayings is that companies get the investors they deserve. Gannett with its fat profit margins and good dividends, attracted hogs. Hogs demand to be fed — and care about nothing else.

    Hogs dislike phrases like “future investment” and even “R&D.” They want their hog chow NOW, and they squeal when they don’t get it.

    This stock plunge will purge the company of most hogs (for now). The question is whether there will be any company left at the end of the plunge.

  18. Anonymous Says:

    You must know a different Mike Coleman than I did. I wouldn’t trust that man with a ten foot pole.

  19. Anonymous Says:

    Your 401K is safe as long as the investments within it are safe. If the company tanks you take it with you. Best thing to do is roll it into an IRA if that happens. Hopefully you’ve been selling the GCI matching stock on a regular basis.

    The Pension is another matter. If you read the annual report it is underfunded… but not terribly so. If the investments in the Pension fund stop performing the underfunded portion will expand reducing the amount available for future retiree’s if it is not made up. If the company goes into bankruptcy they can jetison the unfunded portion and stop making future payments. The trustees or administrators can probably make changes to the payouts in that scenario. At the end of 2007 the GCI Pension had 1.2 million shares of Gannett stock in it from which it received $1.7 million of annual income. In both cases neither amount was a significant amount given the overall size of the pension fund. If the pension fund ever reaches the point where its taken over by the PBGC (Pension Benefit Guaranty Corp) payouts typically are about 30% of normal with maximum lump sums of around $45000

  20. Anonymous Says:

    By the appearance of inaction, the GCI Board soon could be considered to be in breach of its fiduciary duty. In terms of an equity freefall, this is approaching Lucent, MCI and some of the other classics. Anyone recall DrKoop.com?
    Valued at $1 billion. Sold on the steps for 186k.

  21. Anonymous Says:

    I can’t wait until the stock price is at zero. Let’s root for that. Then everyone can loose their job. That would be fun to watch.

  22. Anonymous Says:

    Is the pension underfunded? We were told that Gannett would not have been able to freeze the pension if it was underfunded because the feds would not allow it. Reportedly, only fully funded pensions can be frozen. Can anyone validate this?

  23. Anonymous Says:

    Funded with a stock that has dropped by 60% and heading southward.

  24. Anonymous Says:

    I don’t pretend to know all the rules about Pension Funds but do know that once in Bankruptcy anything goes. To be fair the underfunded portion has shrunk the last several years.

    The Pension Fund has only $48million of its assets as GCI stock compared to total Assets of $3.3 Billion at the end of 2007, not that big an issue in the grand scheme of things. The 1.2 million shares of GCI stock are now worth approx $24mil @ $20/share. Read the 2007 annual report around page 48 for more details.
    http://www.gannett.com/07GCIAnnualReport.pdf

    I know you’ll love the opening on page 1

    2007 Annual Report • Become the digital destination for local news and
    information in all our markets. • Create new business opportunities in
    the digital space through internal innovation, acquisitions or affiliations. •
    Maintain strong financial discipline throughout our operations. • Strengthen
    the foundation of the company by finding, developing and retaining the
    best and brightest employees through a robust Leadership and Diversity
    program.

  25. Anonymous Says:

    Horseshit. What a crock.

  26. Anonymous Says:

    I’m out… I don’t want to lose what little money is in there…

  27. Anonymous Says:

    “then everybody will loose their job”??? it’s lose…you looser!

  28. Anonymous Says:

    Hey Jim,

    That would be a question I would like to ASK TARA…. What the true makeup of our Pension really is. Is it fully funded, partially funded? If you ask the local HR… they’re clueless… I called the 1800 number we were given and the operator put me on hold and then came back and told me it was fully guaranteed… Do I believe her? no… It really would be nice to have an answer from someone responsible….

  29. Anonymous Says:

    It’s pretty clear if you read the annual report. It doesn’t cut and paste well here but the important parts are (for December 2007). All numbers are in 1000’s

    Benefit Obligations at end of year
    $3,519,996

    Fair Value of Fund Assets at end of year

    $3,376,268

    Funded Status at end of year.

    ($143,728)

    For those of you who aren’t familiar with accounting conventions, brackets are the way you identify negative numbers.

    Here’s the table from the 2007 annual report.It shows 2007 and 2006

    The following table provides a reconciliation of pension benefit
    obligations (on a Projected Benefit Obligation measurement
    basis), plan assets and funded status of company-sponsored retirement
    plans, along with the related amounts that are recognized in
    the Consolidated Balance Sheets.
    In thousands of dollars
    Dec. 30, 2007 Dec. 31, 2006
    Change in benefit obligations
    Benefit obligations at beginning
    of year . . . . . . . . . . . . . . . . . . . . . . . . $ 3,527,523 $ 3,333,710
    Service cost . . . . . . . . . . . . . . . . . . . . 100,213 107,644
    Interest cost . . . . . . . . . . . . . . . . . . . . 199,714 183,637
    Plan participants’ contributions . . . . . 13,212 13,026
    Plan amendments . . . . . . . . . . . . . . . (7,077) 14,757
    Actuarial gains . . . . . . . . . . . . . . . . . (98,764) (117,047)
    Foreign currency translation . . . . . . . 14,551 82,036
    Gross benefits paid . . . . . . . . . . . . . . (229,376) (201,615)
    Acquisitions . . . . . . . . . . . . . . . . . . . . — 111,375
    Benefit obligations at end of year . . . $ 3,519,996 $ 3,527,523
    Change in plan assets
    Fair value of plan assets at
    beginning of year . . . . . . . . . . . . . . . . $ 3,291,675 $ 2,963,897
    Actual return on plan assets . . . . . . . 251,731 361,128
    Plan participants’ contributions . . . . . 13,212 13,026
    Employer contributions . . . . . . . . . . . 34,225 10,659
    Gross benefits paid . . . . . . . . . . . . . . (229,376) (201,615)
    Foreign currency translation . . . . . . . 14,801 77,980
    Acquisitions . . . . . . . . . . . . . . . . . . . . — 66,600
    Fair value of plan assets at
    end of year . . . . . . . . . . . . . . . . . . . . . $ 3,376,268 $ 3,291,675
    Funded status at end of year . . . . . . . $ (143,728) $ (235,848)

  30. Anonymous Says:

    I’m wondering why Gannett’s IRS form 5500 isn’t showing up on that free erisa site. The last pension 5500 I see is for 2005. I found the 2006 health benefits, 401K, employee assistance and others, but not the main pension one.

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