Tomorrow after the bell, Playboy (PLA) announces results of its third quarter ending, September 30, 2009.
Operationally, things are not looking too good for the bunny. Not only did Hefner get dumped by his three blond beauties (don’t feel too bad, as he quickly found a replacement), but his grasp of reality with business gets more tenuous by the day.
Hefner may have lost his marbles, and that is not good for shareholders.
Analysts expect the struggling entertainment company to post a loss of 2 cents a share for the period. For the full year ending December 31, the expectation is for PLA to lose 66 cents per share. More importantly, the expectation is for a profit in the fourth quarter of 3 cents a share.
The current reporting period then will provide crucial information on what may be a turning point for the company. Investors have been waiting patiently for this company to start printing money worthy of its brand equity.
Aside from a challenging economic environment and decline for many other print media businesses, Playboy has its own unique issues. Its fortunes are tied to its founder, Hugh Hefner, and Hefner is out of touch.
He may still think of himself as a player, but the world has passed him by in many ways. Attempts to catch up to the times have been mediocre at best. A digital on-line strategy, combined with retail expansion of the brand, has yet to make a mark.
That is why this quarter is so important. Has the company turned the corner, as estimates suggest?
Shares of Playboy have enjoyed a boost of late, mostly on speculation that the company will be sold. In a perverse way, then, a poor earnings report may give that case a lift. The sooner Hefner realizes how bad things are, the sooner the company can be sold.
Despite most companies beating earnings amidst an improving economic backdrop, Playboy is indeed likely to disappoint. A double-digit loss is not out of the question here. There are no real indications that business has improved.
The sale option is the shareholders best and possibly only hope.
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