Zacks Analyst Blog Highlights: The New York Times, Amazon, News Corporation, Consolidated Edison and Schlumberger Limited

January 24, 2011

CHICAGO, Jan. 24, 2011 /PRNewswire/ — Zacks.com Analyst Blog features: The New York Times Company (NYSE: NYT), Amazon.com Inc. (Nasdaq: AMZN), News Corporation (Nasdaq: NWSA), Consolidated Edison Inc. (NYSE: ED) and Schlumberger Limited (NYSE: SLB).

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Here are highlights from Friday’s Analyst Blog:

Pay and Read from New York Times

The New York Times Company (NYSE: NYT), the diversified media conglomerate, is transmuting its business model by adding diverse revenue streams, which include a pay-and-read model for NYTimes.com with plans to launch a paid subscription website, BostonGlobe.com in 2011.

The company will adopt the Financial Times’ metered system, where readers after browsing a certain number of free articles, are being asked to subscribe. According to Bloomberg, the online subscription would be less than $19.99 a month, which is the cost; customers are charged for the New York Times subscription on Amazon.com Inc.‘s (Nasdaq: AMZN) Kindle e-reader.

The NYTimes.com subscription based model is slated for launch in the first quarter of 2011. It was also specified that the subscribers to the New York Times’ print version will be able to access online content or articles without shelling out additional charges.

The New York Times, which is scheduled to report its fourth-quarter 2010 financial results on February 3, 2011, now expects the rate of fall in print advertising revenue to decelerate to 4% in fourth-quarter 2010 from 5.8% in the third quarter.

The publisher of The New York Times, the International Herald Tribune, The Boston Globe and 15 other daily newspapers forecast digital advertising revenue growth of 10% in the fourth quarter. The company also cautioned that circulation revenue in the quarter under review is expected to fall by 4% to 5%.

The publishing industry has long been grappling with sinking advertising revenue, and the recent global economic meltdown has worsened the situation. This comes in the wake of a longer-term secular decline as more readers choose to get news free online, thereby making the print-advertising model increasingly irrelevant.

To curb shrinking advertising revenue and seeking new revenue avenues, the publishing companies contemplated charging readers for online content. Newspaper companies have been remodeling and restructuring themselves to better align with the growing need of marketers, targeting younger people, affluent households and other demographic groups with multiple web and print publications.

The publishing companies are adapting to the changing facet of the multiplatform media universe, which currently includes mobile, social media networks and reader application products in its fold.

Another media conglomerate, News Corporation (Nasdaq: NWSA) has taken a leap towards an online subscription-based model for general news content. News International, a subsidiary of News Corporation, began charging readers for online content for The Times of London and Sunday Times of London effective June 2010.

Rupert Murdoch, the Chief Executive Officer of News Corporation, had long been pushing for the online subscription model for all general news websites. But newspaper companies had been reluctant to toe the line for fear of losing readership and, in turn, advertisers.

Currently, we have a Neutral rating on The New York Times. The company also holds a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating, and correlates with our long-term recommendation.

Con Edison Falls Behind Consensus

Consolidated Edison Inc.‘s (NYSE: ED) fourth quarter earnings from continuing operations came in at 69 cents, a penny below the Zacks Consensus Estimate of 70 cents. This follows in the footsteps of the year-ago quarter when earnings also underperformed the market. However, results compared favorably with earnings from continuing operations of 67 cents in the year-ago quarter.

On a reported basis, the company reported earnings of 81 cents per share compared with 73 cents in the year-ago quarter. Earnings were boosted year-over-year due to higher rates for the utility subsidiaries and savings in operating expenses through cost control efforts. However, this was partially offset by higher costs for demand side management programs and employee health insurance costs.

The GAAP EPS variations reflect the year-over-year differences, where Con Edison of New York (CECONY) benefited by 37 cents per share as higher rates authorized higher recovery of costs and 2 cent from lower interest expense. This was partially offset by 18 cents from higher operations and maintenance expense, 12 cents from depreciation, and 6 cents from dilutive effects of new stock issuances.

The upshot was a 3-cent upside in EPS year over year while the Orange and Rockland utilities’ EPS was a penny lower. In the Competitive Energy businesses, EPS rose by 7 cents while higher parent company expenses weaned away a penny year-over-year.

Schlumberger 4Q Profit Soars

Schlumberger Limited (NYSE: SLB) reported robust fourth-quarter earnings of 85 cents per share (excluding one-time items), substantially beating the Zacks Consensus Estimate of 77 cents as well as the year-earlier profit of 67 cents per share. The improvement was driven by strong activity in the liquid rich plays in North America and overall improvement in Canada. Full year 2010 earnings per share stood at $2.86, well ahead the Zacks Consensus Estimate of $2.77 and the last year’s profit of $2.78.

The company’s fourth-quarter revenue ramped up by more than 57% to $9.1 billion from $5.7 billion in the year-ago quarter, and surpassed the Zacks Consensus Estimate of $8.8 billion. Full year 2010 total revenue jumped almost 21% to $27.4 billion, beating the Zacks Consensus Estimate of $27.0 billion.

Schlumberger experienced a full quarter of activity from the previously acquired Smith International Inc., and the businesses contributed $2.49 billion to total revenue and $275 million of pre-tax operating income. The merger was dilutive to the fourth quarter earnings per share by 5 cents.

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