Friday, April 16, 2010

Gannett Cost Cutting Pays Taxes Not Dividends

Gannett Co (GCI) reported improved earnings because they can cut expenses faster than revenues shrink. The TV side had the added boost of the Olympics which unfortunately was not enough to offset other losses. The bizarre aspect of Gannett’s income statement is their high tax rate in the face of declining revenues. They are cutting costs but 41% goes to the tax man. The cost cutting exercise is not tax effective. Paying the tax man does not generate cash.

Disclosure: No position in this stock