Dow Jones Chief Swings Axe

NEW YORK -- Dow Jones&Co., the publisher of this newswire and The Wall Street Journal, will make a second round of cost cuts this year, which will include more staff reductions, the company's top executive told employees late Thursday in an e-mail. While Dow Jones (DJ) made cuts that total $120 million annually as the first quarter came to a close, "the downturn in advertising and some other revenues has been broader and more pronounced than we had expected," Chairman and Chief Executive Peter R. Kann said in the staff e-mail, "and has lasted longer than we hoped it would." As a result, he said the company will have to make more cuts, both in its business operations and staffing levels. Dow Jones has already laid off 202 employees and eliminated more than 500 positions overall, accounting for a 6% reduction to its previous employee base. Spokeswoman Vickee Adams didn't specify what parts of the company's staff might be targeted in the latest round of cuts, but said future personnel cuts "would not be of the same magnitude" as the previous round. In his memo, Mr. Kann said a group of senior executives, including Chief Financial Officer Richard Zannino, would "spearhead" an initiative "that has already identified more than $3 million in non-personnel cost reductions, and has a goal of $7 million more." Such moves would come in addition to staff reductions, as well as cuts made in individual business units and staff departments. Like its newspaper-publishing brethren, Dow Jones has been hit hard by rapid declines in advertising-revenue growth, one of the chief metrics Wall Street uses to gauge the relative health of the sector. At an investor conference Monday, Mr. Kann said the company hopes to meet consensus earnings estimates of 50 cents a share for the second quarter, depending on June advertising linage at the Journal, Dow Jones' flagship newspaper. But he also said at that conference that the company has "seen no improvement in advertising volume in June," even though comparisons with year-earlier revenue growth rates had begun to ease. The Journal, part of a print-publishing unit that accounts for about 60% of Dow Jones' corporate revenue, has seen its ad linage plummet 34% per issue through May. The paper's strong reliance on ad revenue from technology and financial-services marketers hasn't helped. In separate remarks Monday, Mr. Zannino said that despite the aggressive spate of cost cuts made toward the end of the first quarter, "advertising has not picked up -- at all -- in the second quarter, nor do we yet see it picking up in the balance of the year." In the staff memo, Mr. Kann said that "both profits and profit margins are likely to decline significantly this year, even with all of the expense reductions." He added top executives' incentives for 2001 will "certainly reflect the state of our business." Mr. Kann also noted Dow Jones won't make cuts haphazardly or "salvage current results at the cost of future projects." He said initiatives to expand the Journal's color capacity in the U.S. remain, as do efforts to redesign The Wall Street Journal Online and expand Dow Jones Newswires into non-English content. In addition to this and other newswires, Dow Jones publishes the Journal and its international and online editions, Barron's and SmartMoney magazines and other periodicals, Dow Jones Indexes and the Ottaway group of community newspapers. Dow Jones is also co-owner with Reuters Group PLC (RTRSY) of Factiva and with General Electric Co.'s (GE) NBC of the CNBC television operations in Asia and Europe. Dow Jones also provides news content to CNBC and to radio stations in the U.S. Copyright (c) 2001 Dow Jones & Company, Inc.

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Dow Jones Chief Swings Axe

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