Playboy misses expectations, says 'murkiness' is ahead

Playboy Enterprises Inc. posted an unforeseen fourth quarter loss and forecasted a first-quarter 30 percent decline in print advertising revenue after a major client cut its print advertisements.

The Chicago magazine publisher and cable TV producer slid to a loss of $1.1 million, or 3 cents per diluted share, in the quarter ended Dec. 31, compared with a year-earlier profit of $3.7 million, or 11 cents per diluted share. It missed analysts' estimated profit of 5 cents per share.

The company received a $2.6 million tax benefit, but the gain was eaten away by a $1.9 million charge on the sale of assets of its Andrita television studio.

Sales slumped .34 percent to $85.9 million from $86.2 million after improvements in licensing sales failed to offset slumps in television and magazine segments, which comprise the bulk of the company's revenue. Television and online sales fell to $50.7 million from $52.1 million.

Magazine sales were also hit, falling to $24.7 million from $25.2 million. However, licensing revenue rose 17 percent, to $10.5 million from $8.9 million.

"Clearly we face some serious challenges that are not unique to our company," said CEO Christie Hefner.

The company did not release any earnings guidance because of "murkiness" in its publishing and online segments.

The grim first quarter forecast comes on the heels of a 13 percent decrease in ad rates for 2008 and a decision by R.J. Reynolds Tobacco Co., part of Reynolds American Inc., to eliminate all its print advertising, including its 20 pages in Playboy magazine.

Though the numbers of advertising pages increased to 141 from 137 in the fourth quarter and rose to 459 pages from 429 pages for the full year, the total still fell short of previous years' advertising. The company ran 479 ad pages in 2005 and 573 in 2004.

The company doubled its 2007 income but still fell short of analysts' estimate of 23 cents per share. The company made $4.9 million, or 15 cents per diluted share, compared with $2.3 million, or 7 cents per diluted share in the prior year.

Sales rose slightly to $339.8 million from $331.1 million in 2006.