Playboy profit falls 68 per cent

Playboy Enterprises Inc today posted a 68 per cent drop in quarterly profit, hurt by sluggish advertising at its namesake magazine, but an upbeat forecast lifted the media company's stock.

The adult entertainment media company posted a weaker-than-expected profit of US$4.6 million ($6.85 million), or 14 cents per share, down from US$14.5 million, or 43 cents a share, a year earlier.

Still, shares in Playboy, which also owns adult TV channel Spice and a licensing business that markets merchandise bearing the Playboy bunny, rose 70 cents, or 5 per cent, to US$14.70 on the New York Stock Exchange amid the company's upbeat 2006 forecast.

Playboy, which plans to take a charge of about 10 cents per share to account for stock options, said 2006 earnings per share would likely range between 67 cents and 70 cents. Analysts had been forecasting earnings of 67 cents per share on average, according to Reuters Estimates.

For the fourth quarter, revenue rose 2 per cent to US$91 million, narrowly topping analysts' average estimate of US$90.3 million. But profit fell slightly short of Wall Street expectations of 16 cents per share.

As has been the case in recent quarters, Playboy's publishing division proved to be the main drag on earnings, with lower advertising and newsstand sales resulting in a loss of US$3.1 million for the division. Publishing sales fell 15 per cent.

"We knew this was going to be a challenging year in publishing, as it was for the industry," Christie Hefner, chairman and chief executive, said in an interview.

Hefner said higher paper prices, a postal rate increase, and weak newsstand sales for almost every category of magazine have plagued earnings in the publishing industry.

Advertising revenue and pages for the company's namesake magazine are expected to be down approximately 30 per cent in the first quarter, compared with a year ago.

Still, eyeing growth in global markets, Playboy has said it is in talks to launch a men's magazine in India that will not bearing the Playboy name. The company is also looking at other international magazine launches to boost its worldwide presence.

And its licensing earnings continue rise, climbing 89 per cent to US$5.5 million. Revenue from the licensing unit rose 63 per cent to US$8 million.

Profit from TV and the internet fell 19 per cent to US$11.9 million as US TV revenue fell. Revenue, buoyed by international TV and online subscriptions, rose 6 per cent to US$56.3 million.

- REUTERS