Blog Post

Earnings: Miss February's Bad Month: Playboy Q4 Loss Hits $145.7 Million; Revs Drop 18.7 Percent

Stay on Top of Enterprise Technology Trends

Get updates impacting your industry from our GigaOm Research Community
Join the Community!

imagePlayboy (NYSE: PLA) Enterprises’ expected Q4 loss was $145.7 million ($4.37 per share), a bit higher than the roughly $100 million net loss it warned investors about last month. In any case, its loss widened considerably from Q407’s $1.1 million net loss. This time around, Playboy pointed to a variety of impairment, restructuring and other charges totaling $157.2 million as the cause for the expanding loss.

Revenues fell 18.7 percent in the quarter to $69.8 million from last year’s $85.9 million. Playboy blamed the decline on the sale of its TV studio and the outsourcing of the company’s e-commerce business. The poor earnings results come at a particularly difficult time for the company. While the magazine business in general is crashing, the company has been without a permanent CEO since Christie Hefner announced in December that she would be relinquishing the role, as well as her chairman and board seats. Meanwhile, Playboy has placed much of its hopes on the relaunched Playboy.com, which sports a wide array of social net features and more free, ad-supported content. Still, in this market, ad support is not likely to provide much of a boost.

Entertainment: Mixed results here, as the segment’s income doubled to $5 million in Q4, due in part to improved profitability from Playboy’s domestic TV business. Still, it wasn’t enough to prevent revenues from falling 21 percent to $39.9 million. Playboy tried to make the case that VOD is doing well, but international TV revenues were dismal, down nearly 30 percent to $9.9 million. U.K. Online/mobile revenues were also way off, falling 41 percent year-over-year to $10.7 million, which partially reflected the outsourcing of its e-commerce business, but was also due to reduced pay-site traffic and lower ad sales. Another drags on the whole entertainment segment was lower DVD sales, which Playboy a business that Playboy emphasized it will be exiting.

Publishing: The segment’s loss was slimmed to $1.2 million from last year’s $1.5 million. Not surprisingly, revenues were down 11 percent to $22 million year-over-year, primarily due to lower advertising and circulation revenues at Playboy magazine. The company said that it expects Q1 ad revenues to drop roughly 27 percent from the prior year.

Outlook on charges: Playboy also said that it anticipates additional charges this year, including a non-cash impairment charge of about $5 million in in Q1. In addition, in the first half of 2009, Playboy expects to record a $9 million charge relating to the close of the New York office, roughly half of which will be non-cash, and an additional restructuring charge of at least $2 million.

Release | Webcast (11:00 AM EDT) | Transcript (via Seeking Alpha)