Morning News parent loses more money, but stock keeps climbing

Go figure. A.H. Belo, the parent of Dallas’ Only Daily Newspaper, lost $7.1 million in the second quarter as ad revenue declined 30.2 percent from the same period a year ago. So why has its stock price increased more than 50 percent in the last week?

Wall Street thinks the recession is ending, and newspaper stocks always recover when recessions end. In fact, thanks to this surge, I’ve turned a profit on the 200 shares of A.H. Belo that I bought last year when the stock was spiraling down.

But this doesn’t mean Belo and The News are healthy again. Yes, the company has paid off more than $9 million of the $12.5 million it had to borrow, and it keeps slashing expenses (which is probably why Wall Street has been so optimistic) – 21.1 percent lower than in the second quarter last year. But revenue is down $70 million from 2008, and the cut in expenses is only keeping pace with the drop in revenue.

Unless revenue picks up, it may be time for News employees to start checking out the DMNCuts blog.



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