Last updated: 1:28 pm
September 12, 2008
Posted: 3:47 am
September 12, 2008
IN his annual "State of the Times" address to employees yesterday, New York Times Chairman Arthur "Pinch" Sulzberger painted a rosy picture of the company and its newest investor, Mexican billionaire Carlos Slim - but Wall Street still seems skeptical.
Slim, ranked by Forbes as the second-richest person in the world, with a net worth of $60 billion, on Tuesday disclosed that he had purchased 9.1 million Class A shares, which gave him 6.4 percent of the company stock.
That makes him the third-largest stockholder who is not a member of the controlling Ochs-Sulzberger family.
"He [Sulzberger] said that they were aware of it and felt it was a good thing," said one insider who was present at the meeting.
The question on everyone's mind is what Slim will do as a Times shareholder.
Wall Street seemed intrigued but not overly optimistic that Slim, who made his fortune in the Latin American telecommunications industry, will force great change on the struggling newspaper giant.
The stock closed yesterday at $15.23, up $1.27, or 9 percent. Yet the Times' shares are still off 13 percent this year.
"We would not interpret his investment as a precursor to some form of restructuring action by the company, given NYT's dual-class stock structure and the Sulzberger family's control via their ownership of 90 percent of the super-voting B shares," wrote Goldman Sachs analysts Peter Appert and Stephanie Withers in a report yesterday.
"We like NYT's national franchise and long-term strategy to drive increasing Internet revenues; we do not like the valuation of stock, particularly in light of near-term earnings challenges. Key risks to our price target include ad-market trends and a family-controlled board."
Added another Wall Street source, "I don't know what [Slim] adds to the party."
This source noted that two activist stockholders, Harbinger Capital and Firebrand Partners, have already obtained seats on the board.
"I don't see him [Slim] accelerating the pace of change," said the analyst. "We'll see what happens, but frankly, I don't get it."
At Sulzberger's "State of the Times" meeting, one source said, "It was the typical rah-rah stuff. You'd think it was the early '90s."
One source asked Sulzberger if he would cut the company's dividend to shareholders and divert money to the distressed Newspaper Guild-administered health plan.
Sulzberger said he would not negotiate worker issues at the Town Hall style meeting.
At another point, he declined to say whether any future cuts would include managers.
"It depends on the manager," Sulzberger said.
Falling stars
Life & Style is said to have had one of its worst-selling issues ever last week on the newsstand with a cover that featured Tom Cruise and Katie Holmes and Brad & Angelina.
And that is translating into some major shakeups.
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