Wednesday, July 30, 2008

Cox Radio Death Spiral

Cox Radio (CXR) announced a drop in revenues of approximately 8%. Profitability disappeared and red ink flowed down the corporate hallways and through investor’s pocket books. They did take the opportunity to realize an impairment of $147 million of their intangible costs. While it was a non cash cost, it does represent 14% of shareholder equity. I guess we should be thankful that the smoke and mirrors quotient has been reduced.

The press release essentially did not deal with any of the dynamics of the advertising and/or radio market. Management essentially said they are executing on their strategy, enhancing content and whipping the sales force in a poor ad market. They also indicated that they are making significant progress on their digital media presence. Just what does that mean?

While it is intuitively obvious that media and advertising driven businesses are having a hard time in the downturn, it is not too much to ask the captains on the bridge to start commenting in some detail about the future and how they plan to steer the ship.

Tuesday, July 29, 2008

United Business Media - Does Anyone Get It?

United Business Media (UBM) the b2b information company that is not owned by Warren Buffet (He bought Business Wire) announced business results which should be very encouraging to investors. Dividend and EPS are up 15% on an increase in Revenues of approximately 10%. Sounds good. It would appear that the business model is levered so that incremental revenues fall to profits faster than to expenses.

The press release reads very superficially. For a company built on a press release service you would think they would spend some more time reaching out to investors and providing some critical commentary on their business units. They have stayed with some incredibly superficial comments which are really forms of bafflegab. Read this quote and tell me if its a compelling reason to buy into a company or is it just a self congratulatory comment served up by executives who think they will get really big bonuses;

"United Business Media's consistent growth in earnings per share is evidence of continued success in our strategic development of UBM as a set of focused b2b media businesses which offer integrated suites of media products tailored for specific professional and commercial communities. We continue to direct our businesses towards vertical b2b markets and geographies that provide opportunities for sustainable, profitable growth. Our businesses are generating a growing proportion of their revenues and profits from products which take advantage of the long term structural changes taking place in media markets."

That’s really stroking yourself.

Monday, July 28, 2008

KKR lists on NYSE

KKR Private Equity (KPE.AS) is being taken out by KKR thereby effecting a listing on NYSE because KKR Private Equity is on Euronext. Not a bad move. More investors should have seen that one coming. KKR wants to emulate Blackrock (BLK) and provide itself with the same liquidity and access to more capital. It’s just impossible to identify the valuation. Let’s just say the license to become listed on NYSE has been granted and leave it at that.

Have you ever been to a casino and played a card game. Blackjack perhaps? Take the time to watch the dealer’s hands. Dexterity is key. Strong fluid even motions. The cards are dealt and the players start thinking about the next move. The casino controls the dealer and the deck of cards. A watchful pit boss, with a weary worldly I’ve seen it all expression, makes sure the patrons are handled correctly. Basically that’s KKR. We have reshuffled the cards and started another round.

Are you up for it!