Saturday, August 22, 2009

Paper Cuts: Deep Enough to Sustain a Recovery?

Martin Peers writes:

Investors can suddenly feel a pulse in newspaper companies. But the prognosis remains troubled.

Badly beaten-down newspaper stocks have doubled or tripled in recent weeks after surprisingly upbeat earnings for the quarter ended in June. A bull case has emerged: Newspaper managements have cut costs so heavily that as long as advertising stops declining, fewer publishers will print red ink. Any moderate upturn could produce significant profits.

Well, maybe.

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