The Washington Post Company (WPO) recently posted first-quarter 2011 results. The quarterly earnings of $4.31 per share showed a substantial decrease from $5.58 delivered in the prior-year quarter due to sluggishness witnessed in the students’ enrollment and weak advertising demand.
The quarterly earnings also missed the Zacks Consensus Earnings Estimate of $4.35 per share.
On a reported basis, including one-time items, quarterly earnings came in at $1.87 per share, reflecting a sharp decline from $4.91 posted in the year-ago quarter.
Revenue for the quarter dropped 7.0% to $1,063.6 million from the prior-year quarter, reflecting sluggish performance in the Education and Television Broadcasting division. However, the quarterly revenue came in line with Zacks Consensus Revenue Estimate.
Education division’s revenue went down 10.0% to $640.6 million, reflecting 18.0% decrease in Higher Education revenue partially offset by an 11.0% rise in Kaplan International revenue and 7.0% rise in Kaplan Ventures revenue. Total operating income for the division plunged 73.0% to $15.5 million.
Due to lower student enrollments total Kaplan Higher Education enrollments plunged 23.0% to 92,293 as of March 31, 2011.
Moving ahead, the company expects the operating income in Higher Education segment to continue to decline significantly in the current fiscal due to lingering lower student enrollments.
Kaplan Higher Education recently launched a new program called ‘Kaplan Commitment’, under which the students of Kaplan University, KaplanCollege and other Kaplan Higher Education schools may register to undergo classes to evaluate whether their educational experience commensurate with their needs before incurring a financial obligation. Kaplan will also carry out academic evaluation in order to gauge the probability of the student’s success in the chosen field of study.
The company also notified that those students who wish to withdraw from the program during the stipulated period, defined as risk-free period, and students who do not clear the academic assessments will not be required to pay for the coursework.
New student enrollments dropped 48.0% during the quarter, negatively impacted by number of students that chose to discontinue after the risk-free period along with sluggish demand.
Television Broadcasting revenue inched down 2.0% to $72.2 million during the quarter, whereas operating income decreased 6.0% to $19.6 million, reflecting a significant decline in advertising demand. Additionally, Political advertising revenue also went down $1.8 million during the quarter.
Cable division revenue saw a marginal increase of 0.5% to $190.3 million from $189.4 million in the year-ago quarter, reflecting revenue growth in the cable modem and telephone offset by the rise in promotional money offs. The division’s operating income was $37.7 million, down 11.0% compared with the previous-year quarter.
Newspaper Publishing revenue came in at $155.0 million, marginally down from $155.8 million in the year-ago quarter. Print advertising revenue at The Washington Post declined 8.0% to $63.2 million, reflecting a fall in classified and retail advertising.
Revenue from newspaper online publishing activities, principally washingtonpost.com and Slate, jumped 8.0% to $25.7 million, whereas display online advertising revenue rose 9.0%. Online classified advertising revenue on washingtonpost.com climbed 6.0%.
During the reported quarter, the company marked a 2.9% decrease in daily circulation coupled with a 3.4% decrease in its Sunday circulation year over year.
The Newspaper divisions operating loss stood at $12.8 million, reflecting a slight improvement from an operating loss of $13.8 million witnessed in the prior-year quarter.
Currently we maintain our long-term Neutral recommendation on the stock. Moreover, The Washington Post which faces stiff competition from The New York Times Company (NYT) holds a Zacks #3 Rank, which translates into a short-term Hold rating.
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